##### 



Exhibit 20 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2004 To the Holders of Common Stock
of ERIE FAMILY LIFE INSURANCE COMPANY: The Annual Meeting of Shareholders (the Annual Meeting) of Erie Family
Life Insurance Company (the Company) will be held at 3:30 p.m., local time,
on Tuesday, April 27, 2004, at the Auditorium of the F. W. Hirt-Perry Square
Building, 100 Erie Insurance Place (Sixth and French Streets), Erie,
Pennsylvania 16530 for the following purposes:  1.
    
    To elect 15 Directors of the Company to serve until the
Companys 2005 Annual Meeting of Shareholders and until their
successors are elected; and2.
    
    To transact such other business as may properly come before the
Annual Meeting and any adjournment, postponement or continuation
thereof. This Notice and Proxy Statement, a form of proxy and the Companys Annual
Report for the year ended December 31, 2003, are being sent to all holders of
Common Stock as of the close of business on Friday, March 5, 2004. Holders of Common Stock are requested to complete, sign and return the
enclosed form of proxy in the envelope provided, whether or not they expect to
attend the Annual Meeting in person. By Order of the Board of Directors,/s/
    
    Jan R. Van Gorder
Jan R. Van Gorder,
Senior Executive Vice President,
Secretary and General Counsel
 March 26, 2004
Erie, Pennsylvania 23




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##### 



TABLE OF CONTENTS PageIntroduction
    
    
    25Beneficial Ownership of Common Stock
    
    
    26Proposal 1 - Election of Directors
    
    
    28Director - Shareholder Communications
    
    
    36Executive Compensation
    
    
    37Report of the Compensation Committee
    
    
    44Certain Transactions
    
    
    46Independent Auditors
    
    
    49Report of the Audit Committee
    
    
    50Audit Fees
    
    
    51Annual Report
    
    
    52Other Matters
    
    
    52Appendices:A - Audit Committee Charter
    
    
    53B - Nominating and Governance Committee Charter
    
    
    58
 24




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##### 



ERIE FAMILY LIFE INSURANCE COMPANY
100 Erie Insurance Place
Erie, Pennsylvania 16530 PROXY STATEMENT INTRODUCTION This Proxy Statement, which is first being mailed to the holders of Common
Stock of Erie Family Life Insurance Company (the Company) on or about March
26, 2004, is furnished in connection with the solicitation of proxies by the
Board of Directors of the Company from holders of Common Stock to be voted at
the Annual Meeting of Shareholders and at any adjournment, postponement or
continuation thereof (the Annual Meeting). The Annual Meeting will be held
at 3:30 p.m., local time, on Tuesday, April 27, 2004 at the Auditorium of the
F.W. Hirt-Perry Square Building, 100 Erie Insurance Place (Sixth and French
Streets), Erie, Pennsylvania 16530. Holders of Common Stock will also receive
a form of proxy in accordance with Securities and Exchange Commission (SEC)
rules. Shares of Common Stock represented by proxies in the accompanying form, if
properly signed and returned, will be voted in accordance with the
specifications made thereon by the holders of Common Stock. Any proxy
representing shares of Common Stock not specifying to the contrary will be
voted for the election of the candidates for director named below who were
nominated by the Nominating and Governance Committee (the Nominating
Committee) of the Companys Board of Directors. See Other Matters for a
discussion of certain discretionary voting authority. A holder of Common Stock
who signs and returns a proxy in the accompanying form may revoke it at any
time before it is voted by giving written notice of revocation to the Secretary
of the Company, by furnishing a duly executed proxy bearing a later date to the
Secretary of the Company or by attending the Annual Meeting and voting in
person. The cost of solicitation of proxies in the accompanying form will be borne
by the Company, including expenses in connection with preparing and mailing
this Proxy Statement. Such solicitation will be made by mail and may also be
made on behalf of the Company in person or by telephone by the Companys
regular officers and employees, none of whom will receive special compensation
for such services. The Company, upon request therefor, will also reimburse
brokers, nominees, fiduciaries and custodians or persons holding shares of
Common Stock in their names or in the names of nominees for their reasonable
expenses in forwarding the Companys proxy material to beneficial owners. Only holders of Common Stock of record at the close of business on March
5, 2004 are entitled to vote at the Annual Meeting. Each share of Common Stock
is entitled to one vote on each matter to be considered at the Annual Meeting.
A majority of the outstanding shares of Common Stock will constitute a quorum
at the Annual Meeting for the election of directors. Cumulative voting rights
do not exist with respect to the election of directors. The 15 candidates for
election as a director who receive the largest number of votes cast by the
holders of Common Stock in person or by proxy at the Annual Meeting will be
elected as directors. Shares of Common Stock held by brokers or nominees as 25




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##### 



to which voting instructions have not been received from the beneficial
owner or person otherwise entitled to vote and as to which the broker or
nominee does not have discretionary voting power, i.e., broker nonvotes, will
be treated as not present and not entitled to vote for nominees for election as
directors. Abstentions will be treated as the withholding of authority to vote
for nominees for election as directors. Abstentions from voting and broker
nonvotes will have no effect on the election of directors because they will not
represent votes cast at the Annual Meeting. As of the close of business on March 5, 2004, the Company had 9,450,000
outstanding shares of Common Stock. Erie Insurance Exchange (the Exchange) owns 5,055,562 shares of Common
Stock (53.5%) and Erie Indemnity Company (EIC) owns 2,043,900 shares of
Common Stock (21.6%) which, because such shares collectively represent 75.13%
of the outstanding shares of Common Stock, is sufficient to determine the
outcome of any matter submitted to a vote of the holders of the Companys
Common Stock. BENEFICIAL OWNERSHIP OF COMMON STOCK The following table sets forth as of February 20, 2004 the amount of the
outstanding Common Stock of the Company beneficially owned by (i) each person
who is known by the Company to own beneficially more than 5% of the Companys
Common Stock, (ii) each director and candidate for director nominated by the
Nominating Committee, (iii) each executive officer named in the Summary
Compensation Table and (iv) all executive officers and directors of the Company
as a group. Shares of
    
    Percentage ofName of Individual
    
    Common Stock
    
    Outstandingor Identity of Group
    
    Beneficially Owned(1)(2)
    
    Common Stock(3)5% or Greater Holders:Erie Insurance Exchange
Erie, Pennsylvania
    
    
    5,055,562
    
    
    
    53.50
    %Erie Indemnity Company
Erie, Pennsylvania
    
    
    2,043,900
    
    
    
    21.63
    %Directors:Kaj Ahlmann
    
    
    
    
    
    
    John T. Baily
    
    
    205
    
    
    
    Samuel P. Black, III(4)
    
    
    107,637
    
    
    
    1.14
    %J. Ralph Borneman, Jr.
    
    
    1,536
    
    
    
    Wilson C. Cooney
    
    
    
    
    
    
    Patricia Garrison-Corbin
    
    
    100
    
    
    
    John R. Graham
    
    
    
    
    
    
    Susan Hirt Hagen(5)
    
    
    154,482
    
    
    
    C. Scott Hartz
    
    
    
    
    
    
    
 26




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##### 



Shares of
    
    Percentage ofName of Individual
    
    Common Stock
    
    Outstandingor Identity of Group
    
    Beneficially Owned(1)(2)
    
    Common Stock(3)F. William Hirt(6)
    
    
    167,034
    
    
    
    Samuel P. Katz
    
    
    
    
    
    
    Claude C. Lilly, III
    
    
    
    
    
    
    Jeffrey A. Ludrof
    
    
    100
    
    
    
    Jan R. Van Gorder(7)
    
    
    75
    
    
    
    Robert C. Wilburn
    
    
    500
    
    
    
    Executive Officers(8):John J. Brinling, Jr.(9)
    
    
    1,260
    
    
    
    Philip A. Garcia
    
    
    1,275
    
    
    
    Douglas F. Ziegler
    
    
    570
    
    
    
    All Directors and Executive Officers
as a Group (18 persons)
    
    
    434,774
    
    
    
    4.60
    %
   (1)
    
    Information furnished by the named persons.(2)
    
    Under the rules of the SEC, a person is deemed to be the beneficial owner of
securities if the person has, or shares, voting power (which includes the power to
vote, or to direct the voting of, such securities) or investment power (which
includes the power to dispose, or to direct the disposition, of such securities).
Under these rules, more than one person may be deemed to be the beneficial owner of
the same securities. Securities beneficially owned also include securities owned
jointly, in whole or in part, or individually by the persons spouse, minor children
or other relatives who share the same home. The information set forth in the above
table includes all shares of Common Stock over which the named individuals,
individually or together, share voting power or investment power.(3)
    
    Less than 1% unless otherwise indicated.(4)
    
    Mr. Black owns 2,730 shares indirectly through Samuel P. Black & Associates, Inc., of
which Mr. Black is President. The 107,637 shares also include 1,000 shares owned
indirectly by Mr. Black as executor of his fathers estate and 99,428 shares owned
indirectly by Mr. Black through the Black Family Foundation of which Mr. Black is an
officer. Mr. Black directly owns 4,479 shares.(5)
    
    Includes 300 shares owned directly by Mrs. Hagen and 154,182 shares owned indirectly
by Mrs. Hagen through the Hagen Family Limited Partnership. Mrs. Hagen and her
husband, Thomas B. Hagen, are limited partners of the Hagen Family Limited Partnership
and Mr. Hagen is the general partner. As the general partner of the Hagen Family
Limited Partnership, Mr. Hagen has sole voting power and investment power over the
shares owned by the partnership. Mrs. Hagen disclaims beneficial ownership of 300
shares held by Thomas B. Hagen, Mrs. Hagens husband, and these shares are not
included in the table.(6)
    
    Mr. Hirt owns 100 shares directly and 166,934 shares indirectly through the Hirt
Family 27




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##### 



Limited Partnership. Mr. Hirt is the general and a limited partner of the Hirt
Family Limited Partnership. As the general partner of the Hirt Family Limited
Partnership, Mr. Hirt has the sole right to vote such shares.(7)
    
    Of this total, 30 shares are held directly by Mr. Van Gorder and each of his three
sons owns 15 shares.(8)
    
    Excludes Mr. Ludrof and Mr. Van Gorder, who are listed under Directors.(9)
    
    Includes 630 shares held directly by Mr. Brinling, 315 shares held in an Individual
Retirement Account for Mr. Brinling and 315 shares held in an Individual Retirement
Account for his wife. PROPOSAL 1
ELECTION OF DIRECTORS Introduction The election of directors of the Company by the holders of its Common
Stock is governed by provisions of the Pennsylvania Insurance Holding Companies
Act (the Holding Companies Act) in addition to provisions of the Pennsylvania
Business Corporation Law of 1988 (the BCL), the Pennsylvania Associations
Code and the Companys Bylaws. The following discussion summarizes these
statutory provisions and describes the process undertaken by the Nominating
Committee in connection with the nomination of candidates for election as
directors by the holders of Common Stock at the Annual Meeting. Background of the Companys Nominating Committee Section 1405(c)(4) of the Holding Companies Act, which applies to the
Company, provides that the board of directors of a domestic insurer must
establish one or more committees comprised solely of directors who are not
officers or employees of the insurer or of any entity controlling, controlled
by or under common control with the insurer and who are not beneficial owners
of a controlling interest in the voting stock of the insurer or any such
entity. Such committee or committees must have responsibility for among other
things, nominating candidates for director for election by the shareholders. The Companys Bylaws are consistent with this statutory provision and
provide that (i) the Companys Board of Directors must appoint annually a
Nominating Committee that consists of not less than three directors who are not
officers or employees of the Company or of any entity controlling, controlled
by or under common control with the Company and who are not beneficial owners
of a controlling interest in the voting securities of the Company and (ii) the
Nominating Committee must, prior to each annual meeting of shareholders,
determine and nominate candidates for the office of director of the Company to
be elected by the shareholders to serve terms as established by the Bylaws and
until their successors are elected. 28




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##### 



In accordance with the Companys Bylaws, on April 29, 2003, the Companys
Board of Directors designated a Nominating Committee consisting of Patricia
Garrison-Corbin, Chair, Kaj Ahlmann, Samuel P. Black, III, J. Ralph Borneman,
Jr. and Wilson C. Cooney. Consistent with the Holding Companies Act, none of
these persons is an officer or employee of the Company or of any entity
controlling, controlled by or under common control with the Company or a
beneficial owner of a controlling interest in the voting stock of the Company
or any such entity. All of these persons are independent directors as defined
in the rules of the Nasdaq Stock Market® (Nasdaq), except for Messrs. Black
and Borneman. Messrs. Black and Borneman will not be reappointed to the
Nominating Committee at the April meeting of the Board of Directors because the
charter of the Nominating Committee has been amended since their appointment to
provide that only directors who are independent in accordance with the Nasdaq
rules may serve on this committee. Nominating Procedures The Nominating Committee has no specific minimum qualifications that must
be met by candidates for election to the Board of Directors and, except as may
be required by rules promulgated by the SEC or the Holding Companies Act, the
Nominating Committee may take into account such factors as it deems
appropriate. The Nominating Committee generally bases its nominations on the
general needs of the Company as well as the specific attributes of candidates
that would add to the overall effectiveness of the Board of Directors.
Specifically, among the significant factors that the Nominating Committee may
take into consideration are judgment, skill, diversity, experience with
businesses and other organizations of comparable size, the interplay of the
candidates experience with the experience of the other directors and the
extent to which the candidate would be a desirable addition to the Board and
any committees of the Board of Directors. In identifying and evaluating the individuals that it selects, or
recommends that the Board of Directors select, as director nominees, the
Nominating Committee utilizes the following process:  
    
    The Nominating Committee reviews the qualifications of any
candidates who have been recommended by the shareholders, individual
members of the Board of Directors or, if the Nominating Committee
determines, a search firm. The Nominating Committee may consider
candidates who have been identified by management, but is not
required to do so.
    
    The Nominating Committee evaluates the performance and
qualifications of individual members of the Board of Directors
eligible for re-election at the annual meeting of shareholders.
    
    The Nominating Committee considers the suitability of each
candidate, including the current members of the Board of Directors,
in light of the current size and composition of the Board of
Directors and the above discussed significant factors.
    
    After such review and consideration, the Nominating Committee
determines a slate of director nominees. 29




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##### 




    
    The Nominating Committee endeavors to notify, or cause to be
notified, all director candidates of its decision as to whether to
nominate such individual for election to the Board of Directors. Actions Taken by the Nominating Committee The Companys Bylaws provide that the Board of Directors shall consist of
not less than 7, nor more than 16, directors, with the exact number to be fixed
from time to time by resolution of the Board of Directors. The Board of
Directors has, by resolution, set the number of directors to be elected at the
Annual Meeting at 15. The Companys Nominating Committee met on January 16, 2004 for the purpose
of nominating candidates for election as directors by the holders of Common
Stock at the Annual Meeting. The Nominating Committee recommended to the Board
of Directors that the size of the Companys Board of Directors remain at 15
persons, and all 15 current directors of the Company were nominated for
re-election as a director of the Company. At a meeting of the Companys Board of Directors held on March 2, 2004,
the Board of Directors accepted and approved the recommendation of the
Nominating Committee. Candidates for Election Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the election of the nominees named below, all of whom are
currently directors of the Company and were nominated for election as a
director by the Nominating Committee of the Board of Directors. If a nominee
becomes unavailable for any reason, it is intended that the proxies will be
voted for a substitute nominee selected by the Nominating Committee of the
Board of Directors. The Board of Directors has no reason to believe the
nominees named will be unable to serve if elected. Any vacancy occurring on
the Board of Directors for any reason may be filled by a majority vote of the
directors then remaining in office until the next succeeding annual meeting of
the Companys shareholders. The names of the candidates for director nominated by the Nominating
Committee, together with certain information regarding them, are as follows: DirectorAge
    
    Principal Occupation
    
    of theas of
    
    for Past Five Years and
    
    CompanyName
    
    4/1/04
    
    Positions with Erie Insurance Group
    
    SinceKaj Ahlmann
(3)(4)
    
    
    53
    
    
    Chairman, Danish Re Group, a property and
casualty reinsurer, 2002 to present;
Chairman and Chief Executive Officer,
Inreon, internet reinsurance venture, 2001
to 2003; Chairman of the Board, Hampton Re,
a life reassurance company, 2001 to 2003;
Vice Chairman, E.W.
    
    
    2003
 30




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##### 



DirectorAge
    
    Principal Occupation
    
    of theas of
    
    for Past Five Years and
    
    CompanyName
    
    4/1/04
    
    Positions with Erie Insurance Group
    
    SinceBlanch Holdings, Inc.,
1999 to 2001; Chief Executive Officer,
Employers Reinsurance Company, 1993 to 1999;
Director, the Company, Erie Insurance
Company and EIC.John T. Baily
(1)(2C)(6)
    
    
    60
    
    
    Retired since December 31, 2002; President,
Swiss Re Capital Partners, 1999 to 2002;
Partner, PricewaterhouseCoopers LLP,
Chicago, IL, 1976 to 1999; Director, the
Company, Erie Insurance Co., EIC, Endurance
Specialty Holdings, Ltd., NYMAGIC, Inc. and
RLI Corp.
    
    
    2003Samuel P. Black, III
(4)(5)
    
    
    62
    
    
    President, Treasurer and Secretary, Samuel
P. Black & Associates, Inc., insurance
agency, with which he has been associated
since 1973; Director, the Company, Erie
Insurance Co., EIC, Flagship City Insurance
Company (Flagship) and Erie Insurance
Property & Casualty Company (EI P&C.)
    
    
    1997J. Ralph Borneman, Jr. CIC
(4)
    
    
    65
    
    
    President, Chief Executive Officer and
Chairman of the Board, Body-Borneman
Associates, Inc., insurance agency;
President, Body-Borneman, Ltd. and
Body-Borneman, Inc., insurance agencies,
since 1967; Director, the Company, EIC, Erie
Insurance Co., Erie Insurance Company of New
York (Erie NY) and National Penn
Bancshares.
    
    
    1992Wilson C. Cooney
(3)(4)
    
    
    69
    
    
    Chairman, ForcesGroup, Ltd., insurance and
financial services group, 2000 to present;
Chairman, Cooney Group, LLC, leadership and
business consulting, 1999 to present; Deputy
Chief Executive Officer, United Services
Automobile Association, 1998 to 1999;
President  Property/ Casualty Group, United
Services Automobile Association, 1995 to
1998; Director, the Company, Erie Insurance
Co., EIC and Safelite Group.
    
    
    2003
 31




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##### 



DirectorAge
    
    Principal Occupation
    
    of theas of
    
    for Past Five Years and
    
    CompanyName
    
    4/1/04
    
    Positions with Erie Insurance Group
    
    SincePatricia Garrison-Corbin
(1)(4C)(6)
    
    
    56
    
    
    President, P.G. Corbin & Company, Inc.,
financial advisory services and municipal
finance, 1986 to present; President and
Chief Executive Officer, P.G. Corbin Asset
Management, Inc., fixed income investment
management, 1987 to present; Chairman,
Delancey Capital Group, LP, equity
investment management, 1996 to present;
Chairman, P.G. Corbin Group, Inc.,
investment and financial advisory services,
1996 to present; Director, the Company, Erie
Insurance Co. and EIC.
    
    
    2000John R. Graham
(1)(2)(6C)
    
    
    58
    
    
    Executive-in-Residence and Professor of
Finance, College of Business Administration,
Kansas State University, 2000 to present;
Chairman of the Board of Directors,
President and Chief Executive Officer,
Graham Capital Management, Inc., 1997 to
present; Owner, Graham Ventures, business
consulting and education services, 1970 to
present; Chief Executive Officer, Kansas
Farm Bureau (KFB) Services, Inc., KFB Life
Insurance Company, Farm Bureau Mutual
Insurance Company, KFB Insurance Company and
FB Services Insurance Agency, Inc., 1979 to
1999; Chairman of the Board and Chief
Executive Officer, FB Capital Management of
Kansas, a registered investment advisor,
1994 to 1999; Director, the Company, Erie
Insurance Co., EIC and Tortoise Energy
Infrastructure Corporation.
    
    
    2003Susan Hirt Hagen
(1)(5C)
    
    
    68
    
    
    Co-Trustee of the H.O. Hirt Trusts since
1967; Managing Partner, Hagen, Herr &
Peppin, Group Relations Consultants, from
1990 until it discontinued operations in
1999; Director, the Company, EIC and Erie
Insurance Co.
    
    
    1980
 32




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##### 



DirectorAge
    
    Principal Occupation
    
    of theas of
    
    for Past Five Years and
    
    CompanyName
    
    4/1/04
    
    Positions with Erie Insurance Group
    
    SinceC. Scott Hartz
(2)(6)
    
    
    58
    
    
    Managing Partner, Spire Capital, 2003 to
present; Chief Executive Officer, Hartz
Group, IT and technology consulting, 2002 to
present; Chief Executive Officer, PwC
Consulting, 1995 to 2002; Director, the
Company, Erie Insurance Co., EIC and Siebel
Systems.
    
    
    2003F. William Hirt, CPCU
(1C)(5)
    
    
    78
    
    
    Chairman of the Board of the Company, EIC,
Erie Insurance Co., EI P&C and Flagship
since September 1993; Chairman of the Board
of Erie NY since April 1994; Chairman of the
Executive Committee of the Company and EIC
since November 1990; Interim President and
Chief Executive Officer of the Company, EIC,
Erie Insurance Co., EI P&C, Flagship and
Erie NY from January 1, 1996 to February 12,
1996; Chairman of the Board, Chief Executive
Officer and Chairman of the Executive
Committee of the Company, EIC and Erie
Insurance Co. for more than five years prior
thereto; Co-Trustee of the H.O. Hirt Trusts;
Director, the Company, EIC, Erie Insurance
Co., EI P&C, Erie NY and Flagship.
    
    
    1965Samuel P. Katz
(2)(3)
    
    
    54
    
    
    President, Wynnefield Capital Advisors,
Inc., investment manager of a private equity
venture fund, July 2000 to present; CEO,
Greater Philadelphia First, a business
leadership and civic organization, July 2000
to January 2003; President, EnterSport
Capital Advisors, Inc., a private investment
and consulting firm, September 1997 to
present; Director, the Company, Erie
Insurance Co., EIC and Hershey Entertainment
and Resorts Co.
    
    
    2000
 33




---



##### 



DirectorAge
    
    Principal Occupation
    
    of theas of
    
    for Past Five Years and
    
    CompanyName
    
    4/1/04
    
    Positions with Erie Insurance Group
    
    SinceClaude C. Lilly, III,
Ph.D., CPCU, CLU
(2)(6)
    
    
    57
    
    
    Dean, Belk College of Business
Administration, University of North Carolina
Charlotte, July 1998 to present; James H.
Harris Chair of Risk Management and
Insurance, Belk College of Business
Administration, University of North Carolina
Charlotte, August 1997 to present; Director,
the Company, Erie Insurance Co. and EIC.
    
    
    2000Jeffrey A. Ludrof
(1)(5)
    
    
    44
    
    
    President and Chief Executive Officer of the
Company, EIC, Erie Insurance Co., Erie NY,
EI P&C and Flagship since 2002; Executive
Vice President - Insurance Operations of
EIC, Erie Insurance Co., Erie NY, EI P&C and
Flagship from 1999 to 2002; Senior Vice
President of EIC, Erie Insurance Co., Erie
NY, EI P&C and Flagship from 1994 to 1999;
an officer in various capacities from 1989
to 1994; Director of the Company, Erie
Insurance Co., EIC, Erie NY, EI P&C and
Flagship.
    
    
    2002Jan R. Van Gorder, Esq.
(6)
    
    
    56
    
    
    Senior Executive Vice President, Secretary
and General Counsel of the Company, EIC and
Erie Insurance Co. since 1990, and of
Flagship and EI P&C since 1992 and 1993,
respectively and of Erie NY since April
1994; Acting President and Chief Executive
Officer of the Company, EIC, Erie Insurance
Co., Flagship, Erie NY and EI P&C from
January 2002 to May 2002; Senior Vice
President, Secretary and General Counsel of
the Company, EIC and Erie Insurance Co. for
more than five years prior thereto;
Director, the Company, EIC, Erie Insurance
Co., Flagship, EI P&C and Erie NY.
    
    
    1990Robert C. Wilburn
(1)(2)(3C)
    
    
    60
    
    
    President and Chief Executive Officer,
Gettysburg National Battlefield Museum
Foundation since 2000; Distinguished Service
Professor, Carnegie Mellon University 1999
to 2000; President and Chief Executive
Officer,
    
    
    1999
 -34-




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##### 



DirectorAge
    
    Principal Occupation
    
    of theas of
    
    for Past Five Years and
    
    CompanyName
    
    4/1/04
    
    Positions with Erie Insurance Group
    
    SinceColonial Williamsburg Foundation
from 1992 to 1999; Director, the Company,
Erie Insurance Co., EIC and Harsco, Inc.
   (1)
    
    Member of the Executive Committee.(2)
    
    Member of the Audit Committee.(3)
    
    Member of the Executive Compensation and Development Committee.(4)
    
    Member of the Nominating Committee.(5)
    
    Member of the Charitable Giving Committee.(6)
    
    Member of the Investment Committee.C
    
    Designates Committee Chairperson. The Board of Directors met six times in 2003. The standing committees of
the Board of Directors are the Executive Committee, the Audit Committee, the
Executive Compensation and Development Committee (the Compensation
Committee), the Nominating Committee, the Charitable Giving Committee and the
Investment Committee. The Executive Committee, which met once during 2003, has the authority,
subject to certain limitations, to exercise the power of the Board of Directors
between regular meetings. The Audit Committee met eleven times in 2003. Consistent with Section
1405(c)(4) of the Holding Companies Act and the Sarbanes-Oxley Act of 2002
(Sarbanes-Oxley), the Audit Committee has responsibility for the selection of
independent public accountants, reviewing the scope and results of the audit
and reviewing the adequacy of the Companys accounting, financial, internal and
operating controls. The Audit Committee operates pursuant to a written charter, a copy of
which is included as Appendix A to this Proxy Statement. The Audit Committee
charter may also be viewed on the Companys website at:
http://www.erieinsurance.com. The Compensation Committee met ten times in 2003. Consistent with Section
1405(c)(4) of the Holding Companies Act and the Companys Bylaws, the
Compensation Committee has responsibility for recommending to the Board of
Directors, at least annually, the compensation of the three highest paid
officers of the Company and such other officers as the Board of Directors may
designate, recommending all forms of direct compensation, including any
incentive programs, that would be appropriate for management and employees of
the Company and such other responsibilities as the Board of Directors may
designate. See Executive Compensation  Compensation Committee Interlocks
and Insider Participation. -35-




---



##### 



The Nominating Committee met six times in 2003. Consistent with Section
1405(c)(4) of the Holding Companies Act and the Companys Bylaws, the
Nominating Committee has responsibility for:  
    
    identification of individuals believed to be qualified to
become Board members and to recommend to the Board the nominees to
stand for election as directors;
    
    identification of Board members qualified to fill vacancies on
any committee of the Board;
    
    evaluation of the procedures and process by which each
committee of the Board undertakes to self-evaluate such committees
performance; and
    
    providing the Board an annual performance evaluation of the
Nominating Committee. The Nominating Committee operates pursuant to a written charter, a copy of
which is included as Appendix B to this Proxy Statement. The Nominating
Committee charter may also be viewed on the Companys website at:
http://www.erieinsurance.com. The Charitable Giving Committee, which met three times in 2003, has
responsibility for recommending to the Chief Executive Officer charitable gifts
by the Company within a budgetary limit established by the Board of Directors. The Investment Committee, which met five times in 2003, has responsibility
for assisting the Companys Board of Directors in its general oversight of the
investments of the Company. All directors hold office until their respective successors are elected or
until their earlier death, resignation or removal. Officers serve at the
discretion of the Board of Directors. There are no family relationships
between any directors or executive officers of the Company, except that Mr.
Hirt, Chairman of the Board, Chairman of the Executive Committee and a
director, is the brother of Mrs. Hagen, a director. During 2003, each director attended more than 75% of the number of
meetings of the Board of Directors and the standing committees of the Board of
Directors of which such director was a member. The Board of Directors recommends a vote FOR the 15 candidates for
director nominated by the Nominating Committee. DIRECTOR - SHAREHOLDER COMMUNICATIONS Shareholders of the Company may communicate with the Board of Directors
through the Companys Secretary. Shareholders who wish to express any concerns
to any of the Companys directors may do so by sending them in writing
addressed to a particular director, or in the alternative, to Non-management
Directors as a group, care of the Companys Secretary at the Companys
headquarters, 100 Erie Insurance Place, Erie, Pennsylvania 16530. All such -36-




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##### 



communications that are received by the Companys Secretary will be
promptly forwarded to the addressee or addressees set forth in the
communication. Recognizing that director attendance at the Companys Annual Meeting can
provide the Companys shareholders with an opportunity to communicate with
Board members about issues affecting the Company, the Company actively
encourages its directors to attend the Annual Meeting. In 2003, all of the
Companys directors attended the Annual Meeting. EXECUTIVE COMPENSATION The following table sets forth the compensation during the fiscal years
ended December 31, 2003, 2002 and 2001 of the Chief Executive Officer of the
Company and the four other most highly compensated executive officers of the
Company during 2003 for services rendered in all capacities to Erie Insurance
Group (the Company, EIC, the Exchange and their subsidiaries and affiliates).
The Company, EIC, the Exchange and their subsidiaries and affiliates allocate
total compensation costs among the members of the Erie Insurance Group
according to various formulas. The Companys share of total compensation
expense in 2003 as shown in the following table was 21.4%. Dollar amounts
indicated are pre-individual income taxes. SUMMARY COMPENSATION TABLE Annual Compensation
    
    Long-Term CompensationAwards
    
    PayoutsOther Annual
    
    Restricted
    
    LTIP
    
    All OtherName and
    
    
    
    
    
    
    
    
    
    
    
    
    
    Compensation
    
    Stock
    
    Payments
    
    CompensationPrincipal Position
    
    Year
    
    Salary($)
    
    Bonus($)(1)
    
    ($)(2)
    
    Awards($)(3)
    
    ($)(4)
    
    ($)(5)Jeffrey A. Ludrof
    
    
    2003
    
    
    
    644,992
    
    
    
    323,086
    
    
    
    6,356
    
    
    
    125,953
    
    
    
    147,406
    (6)
    
    
    30,661President and Chief
    
    
    2002
    
    
    
    521,544
    
    
    
    560,109
    
    
    
    4,380
    
    
    
    85,284
    
    
    
    102,927
    
    
    
    38,588Executive Officer
    
    
    2001
    
    
    
    309,463
    
    
    
    202,971
    
    
    
    2,534
    
    
    
    65,125
    
    
    
    63,042
    
    
    
    19,023Jan R. Van Gorder
    
    
    2003
    
    
    
    433,270
    
    
    
    156,757
    
    
    
    12,243
    
    
    
    172,571
    
    
    
    222,580
    (6)
    
    
    17,331Senior Executive Vice President,
    
    
    2002
    
    
    
    476,675
    
    
    
    311,255
    
    
    
    9,587
    
    
    
    120,927
    
    
    
    177,740
    
    
    
    36,135Secretary and General Counsel
    
    
    2001
    
    
    
    384,211
    
    
    
    250,193
    
    
    
    6,020
    
    
    
    122,591
    
    
    
    122,692
    
    
    
    32,564Philip A. Garcia
    
    
    2003
    
    
    
    332,307
    
    
    
    118,709
    
    
    
    7,272
    
    
    
    125,953
    
    
    
    154,381
    (6)
    
    
    13,292Executive Vice President
    
    
    2002
    
    
    
    314,057
    
    
    
    231,741
    
    
    
    5,350
    
    
    
    86,625
    
    
    
    107,146
    
    
    
    12,563and Chief Financial Officer
    
    
    2001
    
    
    
    280,457
    
    
    
    184,102
    
    
    
    3,397
    
    
    
    76,441
    
    
    
    66,777
    
    
    
    18,148John J. Brinling, Jr.
    
    
    2003
    
    
    
    284,787
    
    
    
    101,107
    
    
    
    8,704
    
    
    
    122,182
    
    
    
    154,993
    (6)
    
    
    18,941Executive Vice President
    
    
    2002
    
    
    
    281,836
    
    
    
    180,928
    
    
    
    5,983
    
    
    
    85,610
    
    
    
    121,103
    
    
    
    31,2522001
    
    
    
    260,408
    
    
    
    147,452
    
    
    
    2,688
    
    
    
    81,830
    
    
    
    82,350
    
    
    
    30,040Douglas F. Ziegler
    
    
    2003
    
    
    
    265,000
    
    
    
    126,982
    
    
    
    4,991
    
    
    
    69,376
    
    
    
    98,873
    (6)
    
    
    10,600Senior Vice President,
    
    
    2002
    
    
    
    258,848
    
    
    
    170,621
    
    
    
    4,386
    
    
    
    45,833
    
    
    
    84,960
    
    
    
    10,354Treasurer and Chief
    
    
    2001
    
    
    
    229,471
    
    
    
    95,767
    
    
    
    3,658
    
    
    
    69,474
    
    
    
    64,986
    
    
    
    9,179Investment Officer
   (1)
    
    The amounts indicated in the Bonus column represent amounts earned by the named executives under EICs current Annual Incentive
Plan (the Incentive Plan). The purpose of the Incentive Plan is to promote the best interests of the Exchange while enhancing -37-




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##### 



shareholder value of the Erie Insurance Group by basing a portion of selected employees compensation on the performance of such
employee and the Erie Insurance Group. Performance measures are established by the Compensation Committee based on the
attainment of individual performance goals and Erie Insurance Groups financial goals compared to a selected peer group. The
amounts indicated include reimbursement for perquisites in the amounts of $31,494, $10,752, $5,861, $15,974 and $0 in 2003;
$10,634, $11,365, $8,739, $7,069 and $0 in 2002 and $8,693, $11,339, $9,749, $8,594 and $0 in 2001 for Messrs. Ludrof, Van
Gorder, Garcia, Brinling and Ziegler, respectively.(2)
    
    Amounts indicated in the Other Annual Compensation column include the taxable value of group life insurance policies in excess
of $50,000 and the associated tax reimbursement for the named executive officers. Amounts also include dividends paid on shares
under the previously approved EICs current Long-Term Incentive Plan (the LTIP).(3)
    
    The Restricted Stock Awards column represents LTIP benefits expressed in dollar amounts using the closing price of EICs Class
A Common Stock as of the end of the respective year ($42.38 at December 31, 2003, $36.26 at December 31, 2002 and $38.49 at
December 31, 2001) that remain restricted at the end of the year. The number of shares awarded to Messrs. Ludrof, Van Gorder,
Garcia, Brinling and Ziegler, respectively, were: 2,972, 4,072, 2,972, 2,883 and 1,637 for 2003; 2,352, 3,335, 2,389, 2,361 and
1,264 for 2002 and 1,692, 3,185, 1,986, 2,126 and 1,805 for 2001. See Long-Term Incentive Plan for a detailed description of
the LTIP. LTIP dividends earned in the current year are reported in Other Annual Compensation when paid or in All Other
Compensation when deferred.(4)
    
    The LTIP Payments column represents LTIP benefits that became unrestricted at the end of 2003. The shares for 2001 were
distributed in January 2002, the shares for 2002 were distributed in January 2003 and the shares for 2003 were distributed in
January 2004. All of such shares were valued using the actual share price at the time of distribution. The number of shares
distributed after withholding for income taxes for 2003 for Messrs. Ludrof, Van Gorder, Garcia, Brinling and Ziegler were 3,508,
3,402, 2,176, 2,485 and 1,393, respectively; 2,830, 2,744, 1,654, 2,257 and 1,311, for 2002, respectively, and 928, 2,180,
1,186, 685 and 1,103 for 2001, respectively. Mr. Brinling deferred the distribution of 531 shares in 2003 (valued using the
share price as of December 31, 2003), 1,076 shares in 2002 (valued using the share price as of December 31, 2002) and 1,075
shares in 2001 (valued using the share price as of December 31, 2001).(5)
    
    Amounts shown in the All Other Compensation column include matching contributions made by Erie Insurance Group pursuant to
EICs Employee Savings Plan, premiums paid by Erie Insurance Group on behalf of the named individuals on split dollar life
insurance policies, expenses for spousal travel and deferred dividends and related earnings. For the year 2003, matching
contributions made by Erie Insurance Group to the Employee Savings Plan amounted to $25,800, $17,331, $13,292, $11,391 and
$10,600 on behalf of Messrs. Ludrof, Van Gorder, Garcia, Brinling and Ziegler, respectively. For the year 2002, matching
contributions made by Erie Insurance Group to the Employee Savings Plan amounted to $20,862, $19,067, $12,563, $11,274 and
$10,354 on behalf of Messrs. Ludrof, Van Gorder, Garcia, Brinling and Ziegler, respectively. For the year 2001, matching
contributions made by 38




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##### 



Erie Insurance Group to the Employee Savings Plan amounted to $12,378, $15,368, $11,218, $10,416 and $9,179
on behalf of Messrs. Ludrof, Van Gorder, Garcia, Brinling and Ziegler, respectively. In 2003, the Company and EIC negotiated the
termination of all split-dollar life insurance arrangements with its officers, was repaid for all premiums previously paid by EIC
and replaced the arrangements with Insurance Bonus Agreements. Premiums paid in 2003 under the Insurance Bonus Agreements were
$31,494, $3,535, $0, $4,196 and $0 for Messrs. Ludrof, Van Gorder, Garcia, Brinling and Ziegler, respectively, and are included
in the amounts shown in the Bonus column. Premiums paid during 2002 for split dollar life insurance policies for Messrs.
Ludrof, Van Gorder, Garcia, Brinling and Ziegler, respectively, were: $17,726, $17,068, $0, $17,436 and $0. Premiums paid during
2001 for split dollar life insurance policies for Messrs. Ludrof, Van Gorder, Garcia, Brinling and Ziegler, respectively, were:
$6,645, $17,196, $6,930, $17,538 and $0. Expenses for spousal travel were $4,861 and $4,461 for Messrs. Ludrof and Brinling,
respectively, in 2003. Mr. Brinling also deferred dividends of $2,451, $2,192 and $1,967 and interest on deferred dividends of
$638, $350 and $119 in 2003, 2002 and 2001, respectively.(6)
    
    Amounts shown in the Restricted Stock Awards column are paid in three annual installments beginning with the year in which the
award is made. The amounts shown are for stock that will become unrestricted at December 31, 2004 and 2005. Accordingly,
amounts shown in the LTIP Payments column include payments of stock from the awards made in 2003, 2002 and 2001. Agreements with Executive Officers EIC, on behalf of Erie Insurance Group, has employment agreements with the
following of the Companys senior executive officers: Jeffrey A. Ludrof,
President and Chief Executive Officer; Jan R. Van Gorder, Senior Executive Vice
President, Secretary and General Counsel; Philip A. Garcia, Executive Vice
President and Chief Financial Officer; John J. Brinling, Jr., Executive Vice
President of the Company; and Douglas F. Ziegler, Senior Vice President,
Treasurer and Chief Investment Officer. The employment agreements have the
following principal terms: (a)     A four-year term for Mr. Ludrof expiring December 15, 2007 and a
two-year term for Messrs. Van Gorder, Garcia, Brinling and Ziegler expiring
December 15, 2005, unless the agreement is theretofore terminated in accordance
with its terms, with or without Cause (as defined in the agreement), or due to
the disability or death of the officer or notice of nonrenewal is given by EIC
or the executive 30 days before any anniversary date; (b)     A minimum annual base salary at least equal to the executives annual
base salary at the time the agreement was executed, subject to periodic review
to reflect the executives performance and responsibilities, competitive
compensation levels and the impact of inflation; (c)     The eligibility of the executive under EICs incentive compensation
programs and employee benefit plans; (d)     The establishment of the terms and conditions upon which the
executives employment may be terminated by EIC and the compensation of the
executive in such circumstances. The 39




---



##### 



agreements provide generally, among other things, that if the employment
of an executive is terminated without Cause by EIC or by the executive for Good
Reason (as defined in the agreement) then the executive shall be entitled to
receive: (i) an amount equal to the sum of three times the executives highest
annual base salary during the preceding three years plus an amount equal to
three times the total of the executives highest award during the preceding
three years under any EIC annual incentive plan; (ii) any award or other
compensation to which the executive is entitled under any EIC LTIP; (iii)
continuing participation in any employee benefit plans for a period of three
years following termination to the extent the executive and his or her
dependents were eligible to participate in such programs immediately prior to
the executives termination and (iv) immediate vesting and nonforfeitability of
accrued benefits under EICs Supplemental Retirement Plan for Certain Members
of the Erie Insurance Group Retirement Plan for Employees (the SERP),
including an unreduced benefit for early retirement before age 65, and a
gross-up for income taxes on the annuity and/or lump sum payment of the
retirement benefit; (e)     Provisions relating to confidentiality and nondisclosure following an
executives termination; and (f)     An agreement by the executive not to compete with EIC for a period of
one year following his or her termination, unless such termination was by EIC
without Cause. Stock Options and Stock Appreciation Rights The Company does not have a stock option plan, nor has it ever granted any
stock option or stock appreciation right to any of the persons named in the
Summary Compensation Table. Long-Term Incentive Plan The LTIP is designed to enhance the growth and profitability of Erie
Insurance Group by providing the incentive of long-term rewards to key
employees who are capable of having a significant impact on the performance of
Erie Insurance Group, to attract and retain employees of outstanding competence
and ability and to further align the interests of such employees with those of
the shareholders of Erie Insurance Group. The LTIP was approved by the holders
of EICs Class B Common Stock in 1997 as a performance-based plan under the
Internal Revenue Code of 1986, as amended (the Code), and its continuation
was approved by the holders of EICs Class B Common Stock at its 2002 Annual
Meeting in satisfaction of requirements of the Code. The LTIP was amended at
EICs 2003 Annual Meeting to increase the maximum value of the phantom share
units that could be earned by a participant in any performance award from
$500,000 to $1,000,000 and at the same time was reapproved by EICs
shareholders. Each of the named participants is granted awards of phantom
share units under the LTIP based upon a target award calculated as a percentage
of the participants base salary. The total value of any phantom share units
is determined at the end of the performance period based upon the growth in
EICs retained earnings. Each participant is then entitled to receive
restricted shares of Class A Common Stock of EIC equal to the dollar value of
the phantom share units at the end of the performance period. The vesting
period for the restricted shares of Class A Common Stock of EIC issued to each
participant is three years after the end of the performance period. If a
participant ceases to be an employee prior to the end of the performance 40




---



##### 



period for reasons other than retirement,
death or disability, the participant forfeits all phantom share units awarded.
If a participant ceases to be an employee prior to the end of the vesting
period for reasons other than retirement, death or disability, the participant
forfeits all unvested restricted shares previously granted. The following
table sets forth target awards granted to each person named in the Summary
Compensation Table, all current executive officers as a group and all employees
other than the executive officers as a group (i) for the three-year performance
period of 2003 to 2005, (ii) for the three-year performance period of 2002 to
2004 and (iii) for the three-year performance period of 2001 through 2003. A new LTIP effective January 1, 2004 has been adopted by EICs Board of
Directors, subject to approval by the holders of EICs Class B Common Stock at
the EIC 2004 annual meeting of shareholders. See Proposal 3  Approval of
the New Long-Term Incentive Plan in the proxy statement for the EIC 2004
annual meeting of shareholders for information regarding the proposed New LTIP.
A copy of that proxy statement may be viewed on EICs website at:
http://www.erieinsurance.com. LONG-TERM INCENTIVE PLAN
AWARDS IN LAST FISCAL YEAR Performance orNumber of
    
    Other PeriodShares, Units or
    
    Until Maturation
    
    Estimated Future Payouts Under Non-Name
    
    Other Rights(#)
    
    or Payout
    
    Stock Price-Based PlansPhantomShare Units
    
    
    
    
    
    Threshold
    
    Target($)
    
    MaximumJeffrey A. Ludrof
    
    
    24,810
    
    
    
    2001-2003
    
    
    
    0
    
    
    
    154,381
    
    
    
    (1
    )74,138
    
    
    
    2002-2004
    
    
    
    0
    
    
    
    560,906
    
    
    
    (1
    )61,302
    
    
    
    2003-2005
    
    
    
    0
    
    
    
    605,320
    
    
    
    (1
    )Jan R. Van Gorder
    
    
    32,184
    
    
    
    2001-2003
    
    
    
    0
    
    
    
    200,263
    
    
    
    (1
    )30,898
    
    
    
    2002-2004
    
    
    
    0
    
    
    
    233,762
    
    
    
    (1
    )25,094
    
    
    
    2003-2005
    
    
    
    0
    
    
    
    247,787
    
    
    
    (1
    )Philip A. Garcia
    
    
    23,493
    
    
    
    2001-2003
    
    
    
    0
    
    
    
    146,183
    
    
    
    (1
    )24,433
    
    
    
    2002-2004
    
    
    
    0
    
    
    
    184,855
    
    
    
    (1
    )20,218
    
    
    
    2003-2005
    
    
    
    0
    
    
    
    199,644
    
    
    
    (1
    )John J. Brinling, Jr.
    
    
    22,145
    
    
    
    2001-2003
    
    
    
    0
    
    
    
    137,792
    
    
    
    (1
    )20,862
    
    
    
    2002-2004
    
    
    
    0
    
    
    
    157,835
    
    
    
    (1
    )16,624
    
    
    
    2003-2005
    
    
    
    0
    
    
    
    164,148
    
    
    
    (1
    )Douglas F. Ziegler
    
    
    12,940
    
    
    
    2001-2003
    
    
    
    0
    
    
    
    80,518
    
    
    
    (1
    )16,522
    
    
    
    2002-2004
    
    
    
    0
    
    
    
    125,000
    
    
    
    (1
    )13,419
    
    
    
    2003-2005
    
    
    
    0
    
    
    
    132,500
    
    
    
    (1
    )Executive Officer Group
    
    
    190,950
    
    
    
    2001-2003
    
    
    
    0
    
    
    
    1,188,171
    
    
    
    (1
    )250,207
    
    
    
    2002-2004
    
    
    
    0
    
    
    
    1,892,992
    
    
    
    (1
    )147,924
    
    
    
    2003-2005
    
    
    
    0
    
    
    
    1,460,664
    
    
    
    (1
    )
 41




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##### 



Performance orNumber of
    
    Other PeriodShares, Units or
    
    Until Maturation
    
    Estimated Future Payouts Under Non-Name
    
    Other Rights(#)
    
    or Payout
    
    Stock Price-Based PlansPhantomShare Units
    
    
    
    
    
    Threshold
    
    Target($)
    
    MaximumNon-Executive Officer
    
    
    104,252
    
    
    
    2001-2003
    
    
    
    0
    
    
    
    648,696
    
    
    
    (1
    )Employee Group
    
    
    117,061
    
    
    
    2002-2004
    
    
    
    0
    
    
    
    885,641
    
    
    
    (1
    )86,078
    
    
    
    2003-2005
    
    
    
    0
    
    
    
    849,974
    
    
    
    (1
    )
   (1)
    
    An executives target award is established by the Compensation Committee. The actual value of an executives
phantom share units at the end of a performance period may be more or less than the executives target
amount. However, the maximum value of phantom share units earned by an executive for each of the 2001-2003
and 2002-2004 performance periods is $500,000. For the 2003-2005 performance period, the maximum value of
phantom share units earned may not exceed $1,000,000. Pension Plan The following table sets forth the estimated total annual benefits payable
upon retirement at age 65 under the Erie Insurance Group Retirement Plan for
Employees and the SERP (collectively, the Retirement Plans). PENSION PLAN TABLE Years of ServiceRemuneration
    
    15
    
    20
    
    25
    
    30$ 250,000
    
    $
    75,000
    
    
    $
    100,000
    
    
    $
    125,000
    
    
    $
    150,000300,000
    
    
    90,000
    
    
    
    120,000
    
    
    
    150,000
    
    
    
    180,000350,000
    
    
    105,000
    
    
    
    140,000
    
    
    
    175,000
    
    
    
    210,000400,000
    
    
    120,000
    
    
    
    160,000
    
    
    
    200,000
    
    
    
    240,000450,000
    
    
    135,000
    
    
    
    180,000
    
    
    
    225,000
    
    
    
    270,000500,000
    
    
    150,000
    
    
    
    200,000
    
    
    
    250,000
    
    
    
    300,000550,000
    
    
    165,000
    
    
    
    220,000
    
    
    
    275,000
    
    
    
    330,000600,000
    
    
    180,000
    
    
    
    240,000
    
    
    
    300,000
    
    
    
    360,000650,000
    
    
    195,000
    
    
    
    260,000
    
    
    
    325,000
    
    
    
    390,000700,000
    
    
    210,000
    
    
    
    280,000
    
    
    
    350,000
    
    
    
    420,000750,000
    
    
    225,000
    
    
    
    300,000
    
    
    
    375,000
    
    
    
    450,000800,000
    
    
    240,000
    
    
    
    320,000
    
    
    
    400,000
    
    
    
    480,000
 The compensation covered by the Retirement Plans is the base salary
reported in the Summary Compensation Table. -42-




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##### 



Under the Retirement Plans, credited years of service is capped at 30
years. Credited years of service for each of the individuals named in the
Summary Compensation Table is as follows: Jeffrey A. Ludrof  23 years, Jan
R. Van Gorder  23 years, Philip A. Garcia  23 years, John J. Brinling, Jr.
 30 years and Douglas F. Ziegler  16 years. The benefits under the Retirement Plans are computed on the basis of
straight-life annuity amounts and a life annuity with a ten-year certain
benefit. The benefits listed in the Pension Plan Table are not subject to
deduction for Social Security or other offset amounts. The information in the
foregoing table does not reflect certain limitations imposed by the Code. The
Code prohibits the inclusion of earnings in excess of $205,000 per year
(adjusted periodically for cost of living increases) in the average earnings
used to calculate benefits. The Code also limits the maximum annual pension
(currently $165,000, but adjusted periodically for cost of living increases)
that can be paid to each eligible employee. The SERP provides benefits for
senior management in excess of the earnings limitations imposed by the Code
similar to those provided to all other full-time employees as if the Code
limitations were not in effect. Those benefits are incorporated into the
Pension Plan Table. Director Compensation The annual retainer for directors for services to all member companies of
the Erie Insurance Group, including the Company, is $25,000, plus $1,500 for
each meeting attended and $1,500 for each committee meeting attended plus an
additional $2,000 per year for each committee chairperson. The Companys share
of the retainer in 2003 was 20%. In addition, all directors are reimbursed for
their expenses incurred in attending meetings. Officers of the Company who
serve as directors are not compensated for attendance at meetings of the Board
of Directors and its committees. See also Certain Transactions. A director
may elect prior to the end of a calendar year to defer receipt of up to 100% of
the directors board compensation for the following year, including retainers,
meeting fees and chairperson fees. A deferred compensation account is
maintained for each outside director who elects to defer board compensation. A
director who defers board compensation may select hypothetical investment
options for amounts in the directors deferred compensation account and such
account is credited, including with hypothetical interest, based on the
investment results of the hypothetical investment options selected. In 2002, EICs Board of Directors, at the recommendation of the
Compensation Committee, approved a deferred stock compensation plan for its
outside directors. The purpose of this plan is to further align the interests
of outside directors with shareholders by providing for a portion of annual
compensation for the directors services in shares of the EICs Class A Common
Stock. A deferred stock account is maintained for each outside director under
the plan. The account is credited annually with a grant of shares of EICs
Class A Common Stock determined by dividing $25,000 by the closing price of
EICs Class A Common Stock on the first business day after EICs annual meeting
of shareholders. Each director vests in the grant 25% every three full
calendar months over the course of a year, with the final 25% vesting on the
date of the next annual meeting if the next annual meeting is held before the
final three full calendar months have elapsed. Dividends paid by EIC are
reinvested into each directors account with additional shares of EICs Class A
Common Stock and such credited shares vest immediately. EIC accounts for the
fair value of its grants under the plan in accordance with FAS 148, Accounting
for Stock-Based Compensation. The annual charge related to -43-




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##### 



this plan to Erie Insurance Group totaled approximately $322,627 for 2003;
the Companys share of this charge for 2003 was approximately 20%. Compensation Committee Interlocks and Insider Participation The Compensation Committee of the Company presently consists of Robert C.
Wilburn, Chair, Kaj Ahlmann, Wilson C. Cooney and Samuel P. Katz. No member of
the Compensation Committee is a former or current officer or employee of the
Company, the Exchange, EIC or any of their respective subsidiaries or
affiliates. All of the directors that serve on the Compensation Committee are
independent as independence is defined in the rules of Nasdaq. Furthermore, no
executive officer of the Company serves as a member of a compensation committee
of another entity, one of whose executive officers serves on the Compensation
Committee, or as a director of the Company, nor does any executive officer of
the Company serve as a director of another entity, one of whose executive
officers serves on the Compensation Committee. REPORT OF THE COMPENSATION COMMITTEE Compensation and Development Philosophy The general philosophy of the Compensation Committee is to provide
executive compensation designed to enhance shareholder value, including annual
compensation, consisting of base salary, annual and long-term incentive
compensation and equity-based compensation. To this end, the Compensation
Committee designs and oversees compensation plans and incentives to link the
financial interests of the Companys executive and senior officers to the
interests of its shareholders, to encourage support of the Companys long-term
goals, to tie executive compensation to the Companys performance, to attract
and retain talented leadership and to encourage ownership of the Companys
stock by executive and senior officers. In making decisions affecting executive compensation, the Compensation
Committee reviews the nature and scope of the officers responsibilities as
well as his or her effectiveness in supporting the Companys long-term goals.
The Compensation Committee also considers the compensation practices of other
corporations that compete with the Company. Based upon these and other factors
that it considers relevant, and in light of the Companys overall long-term
performance, the Compensation Committee has considered it appropriate, and in
the best interest of the shareholders and the Company, to set overall executive
compensation at a level that enables the Company to continue to attract, retain
and motivate the most qualified executive personnel. In addition, the Compensation Committee is responsible for the oversight
of the Companys management succession planning to ensure continuity of
leadership. The Compensation Committee assesses executive development twice
each year and reports and reviews such development activity with the full Board
on an annual basis. During 2003, with the approval of its Board of Directors, the Compensation
Committee undertook a comprehensive analysis of the Companys executive
compensation programs. The purpose of the analysis was to review the executive
compensation program that was adopted in 1996 and assess its competitiveness
with current industry standards. The analysis was also intended to -44-




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evaluate the programs effectiveness in aligning executive and senior
management compensation with the Companys performance and enable the
Compensation Committee to recommend appropriate modifications. The analysis
included the Chief Executive Officer, all other executive officers, senior vice
presidents and regional vice presidents. Compensation elements analyzed
included base salary, short and long-term incentives, as well as plan design. The Compensation Committee considered several industry-recognized
consulting firms with expertise in executive compensation. The Compensation
Committee selected Watson Wyatt World Wide, an industry-recognized consulting
firm with extensive expertise in the field of executive compensation. The
Compensation Committees Chairman, Robert Wilburn, and the other Compensation
Committee members, Kaj Ahlmann, Samuel P. Katz and Wilson C. Cooney, directed
the engagement. The Compensation Committee held six meetings to review the plan design
data and survey information. On December 8, 2003, the Compensation Committee
finalized its recommendation on the new plans design and metrics. The
Compensation Committees recommendations were presented to and approved by the
Board of Directors on December 8, 2003. Recent Analysis of Executive Compensation Programs The recommended changes focused on revisions to the Incentive Plan and
LTIP criteria and metrics. The new EIC Annual Incentive Plan and the new EIC
LTIP became effective January 1, 2004, subject to approval by the holders of
EICs Class B Common Stock at the EIC 2004 annual meeting of shareholders.
Participants include the Chief Executive Officer, all other executive officers,
senior vice presidents and regional vice presidents. The LTIP utilizes three-year performance periods. Eligible participants
include the Chief Executive Officer, all other executive officers, senior vice
presidents and regional vice presidents. Target award percentages for each
participant are established at the start of each three-year period. The target
number of shares is calculated at the beginning of the performance period.
Payouts at the end of each three-year period will be in shares of Class A
Common Stock of EIC based on achievement of selected metrics over the
three-year period when compared with a peer group of companies. Erie Family Life Insurance Company Executive Compensation and Development
Committee: Robert C. Wilburn, Chair
Kaj Ahlmann
Wilson C. Cooney
Samuel P. Katz March 2, 2004 -45-




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Comparison of Cumulative Total Shareholder Return on the Companys Common Stock
with Certain Averages The following graph depicts the cumulative total shareholder return for
the periods indicated for the Companys Common Stock compared to the Standard &
Poors 500 Stock Index and the Standard & Poors Supercomposite Life & Health
Insurance Index. CUMULATIVE TOTAL SHAREHOLDER RETURN COMPARISON(1) CHART (LINE GRAPH) 1998
    
    1999
    
    2000
    
    2001
    
    2002
    
    2003$
    
    $
    
    $
    
    $
    
    $
    
    $Erie Family Life Insurance Company
    
    
    100
    
    
    
    128
    
    
    
    101
    
    
    
    143
    
    
    
    147
    
    
    
    203Standard & Poors 500 Stock Index
    
    
    100
    
    
    
    121
    
    
    
    110
    
    
    
    97
    
    
    
    76
    
    
    
    97Standard & Poors Supercomposite
Life & Health Insurance Index
    
    
    100
    
    
    
    86
    
    
    
    98
    
    
    
    89
    
    
    
    75
    
    
    
    95
   (1)
    
    Assumes $100.00 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in the Companys Common Stock,
Standard & Poors 500 Stock Index and Standard & Poors Supercomposite Life &
Health Insurance Index. Cumulative total shareholder return assumes the
reinvestment of dividends. CERTAIN TRANSACTIONS Directors Borneman and Black are officers and principal shareholders of
insurance agencies that receive insurance commissions in the ordinary course of
business from the Company in accordance with the Erie Insurance Groups
standard commission schedules and agents contracts. Such payments made in
2003 to the agencies for commissions written on insurance policies from EIC -46-




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and
the property and casualty companies managed by the Company amounted to
$5,456,805 and $501,004 for the Borneman and the Black insurance agencies,
respectively. John M. Petersen, a director until April 2003 and former President and
Chief Executive Officer, and previous Chief Investment Officer of the Erie
Insurance Group, who retired as an executive officer of the Company and EIC on
December 31, 1995, entered into a consulting arrangement with EIC effective
January 2, 1996. Under the consulting arrangement, EIC engaged Mr. Petersen to
furnish EIC and its pension trust, the Exchange and the Company with investment
services with respect to their investments in common stocks. As compensation
for services rendered by Mr. Petersen, a fee of .15 of 1 percent, on an
annualized basis, of the total fair market value of the common stocks under
management, was paid to Mr. Petersen. EIC also paid for all necessary and
reasonable expenses related to Mr. Petersens consulting services performed
under this arrangement. The compensation paid to Mr. Petersen under this
arrangement in 2003 by the Exchange, the EIC, the pension trust and the Company
was $2,685,347, $63,638, $78,561 and $0, respectively. Mr. Petersen
discontinued providing services under this consulting arrangement effective
upon his retirement from his consulting arrangement with the Company on
December 31, 2003. The common stock portfolio of the Exchange under the direction of Mr.
Petersen outperformed the Standard & Poors 500 Stock Index, a standard index
used by many managers of equity investments, by $237.4 million during the eight
years ended December 31, 2003. The common stock portfolio performance of EIC,
the pension trust and the Company (combined) was in-line with the Standard &
Poors 500 Stock Index over the same period. The Exchanges common stock
portfolio returned an annualized 11.11%, EIC, the pension trust and the Company
(combined) common stock portfolios returned an annualized 9.50% and the
Standard & Poors 500 Stock Index returned 9.38%. Pursuant to previously approved compensation arrangements for executive
officers, EIC maintained split-dollar life insurance arrangements for the
following former Chief Executive Officers: Mr. Hirt, the Chairman of the Board
of Directors, Thomas B. Hagen, the husband of Mrs. Hagen, a director of the
Company, and Mr. Petersen, a director of the Company until April 2003. EIC
also maintained split-dollar life insurance arrangements for two current
executive officers who serve as directors of the Company: Jeffrey A. Ludrof,
the Companys President and Chief Executive Officer, and Jan R. Van Gorder, the
Companys Senior Executive Vice President, Secretary and General Counsel. In
2003, EIC negotiated the termination of these split-dollar arrangements. For all split-dollar insurance policies for which Mr. and Mrs. Hagen are
the insureds, the policy owner in each case is an irrevocable trust created by
the insured. With respect to the single life split-dollar insurance policies
purchased in 1988 with Mr. or Mrs. Hagen as the insured, the policy owner
entered into an agreement to reimburse EIC on December 31, 2003 for insurance
premiums it previously advanced totaling $258,008. Under the split-dollar
agreement, this reimbursement was not due until the death of the insured for
each policy. The owner of the policies borrowed against the policies to make
this repayment. Beginning in 2004, EIC agreed to provide annually to the
policy owners, as indemnification for the early repayment, an amount equal to
the interest on the policy loans, grossed up for income taxes. The amount of
this payment for 2004 is $45,384. With respect to the second to die
split-dollar life insurance policies purchased in 1990 with Mr. and Mrs. Hagen
as joint insureds, EIC agreed to forgive the policy owners obligation to
reimburse EIC for premiums -47-




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##### 



previously advanced by it in the amount of $543,938.
EIC also agreed to indemnify Mr. Hagen in the amount of $414,661 for the
income tax liability resulting from the forgiveness of this obligation, which
payment was made on January 14, 2004. The forgiveness and the tax
indemnification satisfy EICs
obligation to Mr. Hagen to maintain the 1990 policies until the second to
die of the insureds, pursuant to a contractual agreement dated October 21, 1993
between Mr. Hagen and EIC. With respect to the single life split-dollar insurance policies purchased
in 1988 with Mr. Hirt as the insured, the policy owner entered into an
agreement to reimburse EIC on December 31, 2003 for insurance premiums it
previously advanced totaling $256,662. Under the split-dollar agreement, this
reimbursement was not due until the death of the insured for each policy. The
owner of the policies borrowed against the policies to make this repayment.
Beginning in 2004, EIC agreed to provide annually to the policy owners, as
indemnification for the early repayment, an amount equal to the interest on the
policy loans, grossed up for income taxes. The amount of this payment for 2004
is $45,147. With respect to the second to die split-dollar life insurance
policies purchased in 1990 with Mr. Hirt as the insured, the policy owner
entered into an agreement to reimburse EIC on December 31, 2003 for insurance
premiums it previously advanced totaling $914,304. Under the split-dollar
agreement, this reimbursement was not due until the death of the respective
insured for each policy. The owner of the policies borrowed against the
policies to make this repayment. Beginning in 2004, EIC agreed to provide
annually to the policy owners, as indemnification for the early repayment, an
amount equal to the interest on the policy loans, grossed up for income taxes.
The amount of this payment for 2004 is $67,792. With respect to the single life split-dollar insurance policies purchased
in 1988 with Mr. Petersen as the insured, the policy owner entered into an
agreement to reimburse EIC on December 31, 2003 for insurance premiums it
previously advanced totaling $220,660. Under the split-dollar agreement, this
reimbursement was not due until the death of the respective insured for each
policy. The owner of the policies borrowed against the policies to make this
repayment. Beginning in 2004, EIC agreed to provide annually to the policy
owners, as indemnification for the early repayment, an amount equal to the
interest on the policy loans, grossed up for income taxes. The amount of this
payment for 2004 is $38,815. With respect to the second to die split-dollar
life insurance policies purchased in 1990 with Mr. Petersen as the insured, the
policy owner entered into an agreement to reimburse EIC on December 31, 2003
for insurance premiums it previously advanced totaling $703,617. Under the
split-dollar agreement, this reimbursement was not due until the death of the
respective insured for each policy. The owner of the policies borrowed against
the policies to make this repayment. Beginning in 2004, EIC agreed to provide
annually to the policy owners, as indemnification for the early repayment, an
amount equal to the interest on the policy loans, grossed up for income taxes.
The amount of this payment for 2004 is $55,461. See footnote 5 under Summary Compensation Table for a discussion of the
termination of the split-dollar life insurance arrangements for the Companys
officers, including Messrs. Ludrof and Van Gorder. Effective May 1, 2003, EIC entered into leases expiring on April 30,2006
for each floor of a three-story office building, with a lower level basement,
in Erie, Pennsylvania. The first two floors of the building are owned jointly
by the Black Interests Limited Partnership, of which Samuel P. Black, -48-




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##### 



III, one
of the Companys and EICs directors, is the managing general partner and a
limited partner, and by the estate of Mr. Blacks father, of which Mr. Black is
executor. The lower level basement area is owned by Historic Square
Properties, a general partnership in which Jan R. Van Gorder, the Companys and
EICs Senior Executive Vice President, Secretary and General Counsel and a
director,
is a general partner with an approximately one-third economic interest.
This lease transaction for the office building was authorized by EICs Board of
Directors; Mr. Black and Mr. Van Gorder recused themselves from discussion of
and voting on the lease transaction. In addition, the interests of Mr. Black
and Mr. Van Gorder in the office building were fully disclosed to the Board of
Directors prior to its approval of the lease transaction. The amount of rent
paid by EIC to the Black Interests Limited Partnership and the estate of Mr.
Blacks father during 2003 were $75,000 and $25,000, respectively. The amount
of rent paid to Historic Square Properties during 2003 was $21,333. In
addition, EIC made property tax reimbursement payments to the Black Interests
Limited Partnership, the estate of Mr. Blacks father and Historic Square
Properties in the amounts of $8,744.72, $2,914.91 and $1,485.54, respectively,
during 2003. INDEPENDENT AUDITORS At its meeting of September 9, 2002, the Board of Directors amended the
Bylaws of the Company, consistent with the provisions of Sarbanes-Oxley, to
give the Audit Committee sole authority to engage the Companys independent
auditors. The Audit Committee of the Company annually considers the selection
of the Companys independent auditors. The Companys Audit Committee also
selected Ernst & Young, LLP to be the Companys independent auditors for the
fiscal year ended December 31, 2003 and Ernst & Young, LLP served in that
capacity for the fiscal year ended December 31, 2003. The Audit Committee also
selected Ernst & Young LLP to be the Companys independent auditors for the
fiscal year ending December 31, 2004. Malin, Bergquist & Co. (M,B&C) served as the Companys independent
auditors for the Companys 2002 fiscal year. M,B&Cs reports on the Companys
consolidated financial statements for 2002 did not contain an adverse opinion
or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles. For the Companys 2001 and
2002 fiscal years, and through March 27, 2003, the Company had no disagreements
with M,B&C on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure that, if not resolved to
M,B&Cs satisfaction, would have caused M,B&C to make reference to the subject
matter in connection with its report on the Companys consolidated financial
statements for such years; and there were no reportable events, as listed in
Item 304(a)(1)(v) of Regulation S-K. The Company provided M,B&C with a copy of the foregoing disclosures. The
Companys Report on Form 8-K/A dated March 27, 2003 included as Exhibit 16.1 a
copy of M,B&Cs letter, dated March 27, 2003, stating its agreement with such
statements. For the Companys 2001 and 2002 fiscal years, and through March 27, 2003,
the Company did not consult Ernst & Young, LLP with respect to the application
of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the Companys
consolidated financial statements, or any other matters or reportable events
listed in Items 304(a)(2)(i) and (ii) of Regulation S-K. -49-




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Representatives from Ernst & Young LLP and M,B&C are expected to attend
the Annual Meeting and will have the opportunity to make a statement if they so
desire. Such representatives are expected to be available at the Annual
Meeting to respond to appropriate questions. REPORT OF THE AUDIT COMMITTEE The Audit Committee of the Board of Directors oversees the quality and
integrity of the accounting, auditing and financial reporting practices of the
Company. The Board of Directors has adopted a written charter for the Audit
Committee, which is included as Appendix A to this Proxy Statement. The Audit
Committee is comprised of six directors, all of whom are independent as
independence is defined in the rules of Nasdaq and all of whom satisfy the
financial literacy requirements thereof. In addition, the Board of Directors
has determined that one member of the Audit Committee, Mr. Baily, satisfies the
financial expertise requirements and has the requisite experience as defined by
rules of the SEC. The Audit Committees charter states that members may not
simultaneously serve on the audit committees of more than two other public
companies without approval of the Board of Directors. Mr. Baily serves on the
audit committees of more than two other public companies and the Board of
Directors has determined that Mr. Bailys ability to serve on the Audit
Committee has not been impaired. The Audit Committee, which met eleven times during 2003, has the
responsibility, consistent with the requirements of Section 1405(c)(4) of the
Holding Companies Act and the Companys Bylaws, for the selection of
independent auditors, reviewing the scope and results of the audit and
reviewing the adequacy of the Companys accounting, financial, internal and
operating controls. The Audit Committee reviews the Companys financial reporting process on
behalf of the Board of Directors. In fulfilling its responsibilities, the
Audit Committee reviewed and discussed the Companys audited consolidated
financial statements for the year ended December 31, 2003 with management. The Audit Committee discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended. In addition, the Audit
Committee received and reviewed the written disclosures and the letter from the
independent auditors required by Independence Standards Board No. 1,
Independence Discussions with Audit Committees, and has discussed with the
independent auditors their independence. With the goal of increasing its effectiveness, the Audit Committee has
implemented an annual self-evaluation process. The Audit Committee has also
established a procedure whereby persons with complaints or concerns about
accounting, internal control or auditing matters may contact the Audit
Committee. Based upon the discussions and reviews referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Companys Annual Report on Form 10-K
for the year ended December 31, 2003 to be filed with the SEC. -50-




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Erie Family Life Insurance Company Audit Committee: John T. Baily, Chairman
John R. Graham
C. Scott Hartz
Samuel P. Katz
Claude C. Lilly, III
Robert C. Wilburn
February 23, 2004 AUDIT FEES The Audit Committee approves the fees and other significant compensation
to be paid to the independent auditors for the purpose of preparing or issuing
an audit report or related work. The Company provides appropriate funding, as
determined by the Audit Committee, for payment of fees and other significant
compensation to the independent auditor. The Audit Committee also preapproves
all auditing services and permitted non-audit services (including the fees and
terms thereof) to be performed for the Company by its independent auditors,
subject to the de minimis exceptions for non-audit services described in the
Securities Exchange Act of 1934 (the Exchange Act). The Audit Committee
delegated to the Audit Committee Chair preapproval authority for non-audit
services up to $25,000 subject to subsequent approval by the full Audit
Committee at its next scheduled meeting. The Audit Committee reviewed and discussed with Ernst & Young LLP the
following fees for services, none of which were deemed to be for consulting
services, rendered for the 2003 fiscal year and considered the compatibility of
non-audit services with Ernst & Young LLPs independence: 2003EIC and
    
    The Exchange andSubsidiaries
    
    Subsidiary
    
    The Company
    
    TotalAudit Fees
    
    $
    638,075
    
    
    $
    143,682
    
    
    $
    216,839
    
    
    $
    998,596Audit-Related Fees
    
    
    32,651
    
    
    
    
    
    
    
    
    
    
    
    32,651Tax Fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    --All Other Fees
    
    
    6,000
    
    
    
    
    
    
    
    
    
    
    
    6,000Total Fees
    
    $
    676,726
    
    
    $
    143,682
    
    
    $
    216,839
    
    
    $
    1,037,247
 M,B&C served as the Companys independent auditors for 2002. The Audit
Committee reviewed and discussed with M,B&C the following fees for services, of
which $18,025 was deemed to be for consulting services, rendered for the 2002
fiscal year and considered the compatibility of the consulting services with
M,B&Cs independence. -51-




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2002EIC and
    
    The Exchange andSubsidiaries
    
    Subsidiary
    
    The Company
    
    TotalAudit Fees
    
    $
    91,940
    
    
    $
    86,510
    
    
    $
    76,520
    
    
    $
    254,970Audit-Related Fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Tax Fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    All Other Fees
    
    
    16,000
    
    
    
    
    
    
    
    2,025
    
    
    
    18,025Total Fees
    
    $
    107,940
    
    
    $
    86,510
    
    
    $
    78,545
    
    
    $
    272,995
 ANNUAL REPORT A copy of the Companys Annual Report for 2003 is being mailed to all
holders of Common Stock together with this Proxy Statement. OTHER MATTERS The Board of Directors does not know of any matter to be presented for
consideration at the Annual Meeting other than the matters described in the
Notice of Annual Meeting, but if any matters are properly presented, execution
of the proxy enclosed herewith shall confer discretionary authority upon the
persons named to vote on any other matter presented at the Annual Meeting as
directed by a majority of the Companys Board of Directors unless prohibited by
applicable provisions of the Exchange Act. By Order of the Board of Directors,Jan R. Van Gorder,Senior Executive Vice President,Secretary and General Counsel
 March 26, 2004
Erie, Pennsylvania -52-




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APPENDIX A ERIE FAMILY LIFE INSURANCE COMPANY AUDIT COMMITTEE CHARTER June 13, 2000
as modified
September 9, 2003 53




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##### 



ERIE FAMILY LIFE INSURANCE COMPANY
AUDIT COMMITTEE CHARTER  I.
    
    Audit Committee PurposeThe Audit Committee shall be appointed by the Board of Directors of Erie
Family Life Insurance Company (hereafter the Company) to assist the
Board in overseeing (1) the integrity of the financial statements of the
Company provided to shareholders and others; (2) the compliance by the
Company with financial accounting and legal and regulatory requirements;
(3) the independence and performance of the Companys internal and
independent auditors; and (4) the systems of control over financial
reporting.II.
    
    Audit Committee Appointment, Composition, and Meeting ProtocolThe members of the Audit Committee shall be appointed by the Board, and
shall meet independence and experience requirements of the applicable
federal securities law, the Pennsylvania Insurance Holding Company Law,
and the NASDAQ Stock Market of the National Association of Securities
Dealers, Inc. (hereafter NASDAQ or NASD).The Audit Committee shall be comprised of at least three directors, the
exact number to be determined by the Board, each of whom shall be
independent directors as required by applicable statutory requirements and
each member of the Audit Committee shall be free from any relationship
that would interfere with the exercise of his or her independent judgment.All members of the Audit Committee shall be able to read and understand
the financial statements, including the Companys balance sheet, income
statements, and cash flow statements, or become able to do so within a
reasonable period of time after his or her appointment to the Audit
Committee. At least one member of the Audit Committee shall be a financial
expert as defined by the Securities and Exchange Commission. Audit
Committee members shall not simultaneously serve on the audit committees
of more than two other public companies, unless the Board of Directors
determines that such simultaneous service would not impair the ability of
such director to effectively serve on the Audit Committee, and discloses
this determination in the Companys annual proxy statement.The Audit Committee Chair shall be designated by the Board.The Audit Committee shall meet at least four times annually or more
frequently as necessary and appropriate. A quorum of committee members
shall be present at any meeting at which final action or approval is to be
taken or made. A quorum shall be present if a majority of committee
members are present in person or by other means and in the case of an
Audit Committee of three or four members, by the attendance, in person or
otherwise, of two or more committee members. An agenda for each meeting
shall be prepared in advance of each meeting and may be developed in
consultation with management, other committee members, and/or the
independent auditors. The Audit Committee may request any officer or
employee 54




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##### 



of the Company or the Companys outside legal counsel or
independent auditor to attend a meeting of the Committee or to meet
with members of, or consultants to, the Committee.III.
    
    Audit Committee Responsibilities and DutiesThe Audit Committee shall have the following responsibilities and duties:  1.
    
    Review and reassess the adequacy of this Charter at least
annually and recommend any proposed changes to the Board for
approval.2.
    
    Review the annual audited financial statements prior to filing
or distribution. The review should include discussions with
management and the independent auditors of any significant issues
regarding accounting principles, practices and judgments.3.
    
    Consider the integrity of the Companys financial reporting
processes and controls in consultation with management, the
independent auditors and the internal auditors. Discuss significant
financial risk exposures and the steps management has taken to
monitor, control, and report such exposures and to
identify any payments or procedures that might be deemed illegal or
improper. Review significant findings presented by the independent
auditors and the internal audit department together with
managements responses.4.
    
    Review with management and the independent auditors, the
Companys quarterly financial statements prior to the public release
of earnings and the filing or distribution of the quarterly financial
statements. The review shall encompass discussion of any significant
issues arising during the independent auditors limited review
procedures.5.
    
    Review and discuss any significant changes to the Companys
accounting principles and any items required to be communicated by
the independent auditors in accordance with the American Institute of
Certified Public Accountants Statements of Auditing Standards.6.
    
    Select, evaluate, and, if appropriate, replace the independent
auditor. The independent auditors are ultimately accountable to the
Board of Directors and the Audit Committee, as representatives of
shareholders.7.
    
    Approve the fees and other significant compensation to be paid
to the independent auditors for the purpose of preparing or issuing
an audit report or related work. The Company shall provide for
appropriate funding, as determined by the Audit Committee, for
payment of fees and other significant compensation to the independent
auditor.8.
    
    Preapprove all auditing services and permitted non-audit
services (including the fees and terms thereof) to be performed for
the Company by its independent auditor, subject to the de minimis
exceptions for non-audit services described in the Securities
Exchange Act of 1934. The Committee may delegate preapproval
authority to a 55




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member provided that decisions of such member shall be
presented to the full Audit Committee at its next scheduled meeting.9.
    
    Review and discuss with the independent auditors annually all
significant relationships they have with the Company that could
impair the auditors independence.10.
    
    Review the independent auditors audit plan and engagement
letter to determine if it is sufficiently detailed and covers any
significant areas of concern the Audit Committee may have. This
review should include the scope, staffing, locations, reliance upon
management and internal audit and general audit approach.11.
    
    Review and discuss the fourth quarter and year-end earnings
with the independent auditors prior to the public release of the
year-end results.12.
    
    Review and consider the independent auditors judgment
regarding the quality and appropriateness of the Companys accounting
principles as applied in its financial reporting.13.
    
    Discuss with the independent and internal auditors whether
there are any reportable instances of internal control weaknesses.14.
    
    Review managements assertion on its assessment of the
effectiveness of internal controls as of the end of the most recent
fiscal year and the independent auditors report on managements
assertion.15.
    
    Establish procedures for the receipt, retention and treatment
of complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential,
anonymous submission by employee of concerns regarding questionable
accounting or auditing matters.16.
    
    Review with management the appointment, performance and
replacement of the senior internal audit executive.17.
    
    Review with the Companys General Counsel on at least an annual
basis, i.) any legal matters that could have a significant impact on
the Companys financial statements, ii.) the Companys compliance
with applicable laws and regulations, and iii.) inquiries received
from regulators or governmental agencies.18.
    
    Obtain from the independent auditor, assurance that Section 10A
of the Securities Exchange Act of 1934, as amended (relating to the
disclosure of illegal acts), has not been implicated.19.
    
    Prepare and maintain minutes of its meetings. 56




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20.
    
    Periodically report to the Board of Directors on significant
results of its activities.21.
    
    Perform such other duties and activities consistent with the
intent and spirit of this charter, the Companys bylaws, and
governing law, as the Audit Committee deems necessary or appropriate. 57




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APPENDIX B ERIE FAMILY LIFE INSURANCE COMPANY NOMINATING AND GOVERNANCE COMMITTEE CHARTER As Adopted by the
Board of Directors
on March 2, 2004 58




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ERIE FAMILY LIFE INSURANCE COMPANY NOMINATING AND GOVERNANCE COMMITTEE
CHARTER The Nominating and Governance Committee (the Committee) shall be a committee
comprised of members of the Board of Directors of Erie Family Life Insurance
Company (the Company). COMPOSITION AND APPOINTMENT OF THE NOMINATING AND GOVERNANCE COMMITTEE The Committee shall consist of not less than 3 Directors who are not officers
or employees of the corporation or of any entity controlling, controlled by, or
under common control with the corporation and who are not beneficial owners of
a controlling interest in the voting securities of the corporation. Members of
the Committee shall also meet the requirements of an independent director as
that term is defined under Rules of the NASDAQ Stock Market®. The members of
the Committee shall be appointed by the Board. Candidates to fill subsequent
vacancies in the Committee shall be nominated by the Committee as set forth
below and appointed by the Board. Members shall serve at the pleasure of the
Board. COMMITTEE STRUCTURE AND OPERATIONS The Board shall designate one member of the Committee as its chairperson. The
Committee shall meet in person or telephonically at least twice a year at a
time and place determined by the Committee chairperson, with further meetings
to occur, or actions to be taken by unanimous written consent, when deemed
necessary or desirable by the Committee or its chairperson. SCOPE OF THE NOMINATING AND GOVERNANCE COMMITTEES RESPONSIBILITIES The following are the duties and responsibilities of the Committee:  1.
    
    To identify individuals believed to be qualified to become Board members,
and to recommend to the Board the nominees to stand for election as
directors at the Annual Meeting of Stockholders or, if applicable, at a
Special Meeting of Stockholders. In the case of a vacancy in the office
of a director (including a vacancy created by an increase in the size of
the Board), the Committee shall recommend to the Board an individual to
fill such vacancy either through appointment by the Board or through
election by stockholders. In nominating candidates, the Committee shall
take into consideration such factors, as it deems appropriate. These
factors may include judgment, skill, diversity, experience with businesses
and other organizations of comparable size, the interplay of the
candidates experience with the experience of other Board members, and the
extent to which the candidate would be a desirable addition to the Board
and any committees of the Board. The Committee may consider candidates
proposed by management, but is not required to do so. 59




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2.
    
    To identify Board members qualified to fill vacancies on any committee of
the Board, including this Committee, and to recommend that the Board
appoint the identified member or members to the respective committee. In
nominating a candidate for committee membership, the Committee shall take
into consideration the factors set forth in the charter of that committee,
if any, as well as any other factors it deems appropriate, including
without limitation the consistency of the candidates experience with the
goals of the committee and the interplay of the candidates experience
with the experience of other committee members.3.
    
    To review the evolving needs of the Company and recommend changes in the
size of the Board, if appropriate.4.
    
    To monitor and review corporate governance issues, emerging trends, best
practices and recommend to the Board a set of corporate governance
guidelines.5.
    
    To consider any other corporate governance issues that arise from time to
time and to develop appropriate recommendations for the Board.6.
    
    To evaluate the procedures and process by which each committee of the
Board undertakes to self-evaluate such committees performance and
effectiveness and report such evaluation to the Board.7.
    
    To provide to the Board an annual performance evaluation of the
Committee, which evaluation shall compare the performance of the Committee
with the requirements of this charter. The performance evaluation shall
also recommend to the Board any improvements to the Committees charter
deemed necessary or desirable by the Committee. The performance
evaluation by the Committee shall be conducted in such manner, as the
Committee deems appropriate. The report to the Board may take the form of
an oral report by the chairperson of the Committee or any other member of
the Committee designated by the Committee to make this report.8.
    
    To perform any other duties or responsibilities expressly delegated to
the Committee by the Board from time to time relating to the nomination of
Board and committee members. RESOURCES AND AUTHORITY OF THE NOMINATING AND GOVERNANCE COMMITTEE The Committee shall have the resources and authority appropriate to discharge
its duties and responsibilities, including the authority to select, retain,
terminate, and approve any necessary and appropriate fees and other retention
terms of special counsel or other experts or consultants, as it deems
appropriate, without seeking approval of the Board or management. With respect
to consultants or search firms used to identify director candidates, this
authority shall be vested solely in the Committee. MEETINGS The Committee shall meet at such time or times each year as the Committee may
deem appropriate, or as the Board of Directors shall direct from time to time. 60




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REPORTS The Committee shall report to the full Board of Directors at least once a year,
and more often if so directed by the Board, as to the performance of the
Committees duties hereunder. Such reports shall cover such subjects, and
shall be in such detail, as the Board of Directors may request from time to
time. APPROVAL This Charter may be amended, supplemented or repealed by the Board of Directors
at any time. 61