FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
                                (NO FEE REQUIRED)
For the fiscal year ended December 31, 1997

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
                                [NO FEE REQUIRED]
For the transition period from              to

                         Commission File Number   2-39458

                       ERIE FAMILY LIFE INSURANCE COMPANY
               (Exact name of Company as specified in its charter)

           Pennsylvania                                     25-1186315
(State or other jurisdiction                            (I.R.S. Employer
 of incorporation or organization)                      Identification No.)

100 Erie Insurance Place, Erie, Pennsylvania                            16530
(Address of principal executive offices)                             (Zip code)

Company's telephone number, including area code   (814) 870-2000

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $0.40 par value
                                 (Tile of class)

Indicate by check mark whether the Company (1) has filed all reports required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding  12 months  (or for such  shorter  period  that the  Company  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

              Yes    X                            No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Company's  knowledge,  in  definitive  proxy or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate the number of shares  outstanding  of each of the Company's  classes of
common stock,  as of the latest  practicable  date:  9,450,000  shares of Common
Stock outstanding on February 28, 1998.

                      DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the  Company's  Annual  Report to  shareholders  for the fiscal year
ended December 31, 1997 (the "Annual Report") are incorporated by reference into
Parts II and IV of this Form 10-K Report.


                                       1
<PAGE>





                                        INDEX


ITEM NUMBER AND CAPTION                                      PAGE

Item 1.    Business                                            3

Item 2.    Properties                                          6

Item 3.    Legal Proceedings                                   6

Item 4.    Submission of Matters to a
           Vote of Security Holders                            7

Item 5.    Market for Company's Common Stock
           and Related Stockholder Matters                     7

Item 6.    Selected Financial Data                             7

Item 7.    Management's Discussion and Analysis
           of Financial Condition and Results
           of Operations                                       7

Item 8.    Financial Statements and Supplementary Data         7

Item 9.    Changes In and Disagreements With
           Accountants on Accounting and Financial
           Disclosure                                          7

Item 10.   Directors and Executive Officers
           of the Company                                      8

Item 11.   Executive Compensation                             13

Item 12.   Security Ownership of Certain
           Beneficial Owners and Management                   19

Item 13.   Certain Relationships and Related
           Transactions                                       21

Item 14.   Exhibits, Financial Statement Schedules
           and Reports on Form 8-K                            22


                                       2
<PAGE>


                               PART I


ITEM 1.  BUSINESS

       Erie  Family  Life  Insurance  Company  (hereinafter  referred to as "The
       Company",  the "Company" or "Erie Family Life") was  incorporated  in the
       Commonwealth of  Pennsylvania  on May 23, 1967 and commenced  business on
       September 1, 1967.  The Company is  primarily  engaged in the business of
       underwriting  and  selling  non-participating  individual  and group life
       insurance policies, including universal life. Erie Family Life also sells
       individual and group annuities.  Erie Family Life is owned 21.6 % by Erie
       Indemnity  Company and 52.2% by Erie  Insurance  Exchange.  The remaining
       stock is held by the public,  predominantly  agents and employees of Erie
       Indemnity Company.

       Erie Indemnity Company is a Pennsylvania  business  corporation formed in
       1925  to  be  the   attorney-in-fact   for  Erie  Insurance  Exchange,  a
       Pennsylvania-domiciled  reciprocal insurance exchange. The Erie Indemnity
       Company's  principal  business  activity  consists of  management  of the
       Exchange.   The  Erie   Indemnity   Company   also  is   engaged  in  the
       property/casualty   insurance   business   through   its   wholly   owned
       subsidiaries, Erie Insurance Company (Erie Insurance Co.), Erie Insurance
       Company  of New York  (Erie NY) and Erie  Insurance  Property  & Casualty
       Company (Erie P&C) and through its  management of Flagship City Insurance
       Company (Flagship), a subsidiary of the Erie Insurance Exchange. Together
       with the Erie  Insurance  Exchange,  the Erie  Indemnity  Company and its
       subsidiaries  and  affiliates,   including  Erie  Family  Life,   operate
       collectively under the name "Erie Insurance Group."

Products

       The  Company's  portfolio of life  insurance  includes the usual forms of
       permanent life, endowment and term policies, including whole life, family
       income,   mortgage  and  decreasing  term,   group,  and  universal  life
       insurance. In terms of face value, new life business issued in 1997 had a
       ratio of 4:1 of term insurance to whole life insurance coverage.

       Life  insurance  premiums  and  annuity  deposits  have been the  primary
       sources of cash inflows for the Company.


                                                   Classes of Life Insurance
                                                   Percentage of Total Sales


                                           For the year ended December 31,
<TABLE>
<CAPTION>

       Class                                         1997          1996          1995         1994          1993
       -----                                         ----          ----          ----         ----          ----
       <S>                                            <C>          <C>           <C>          <C>           <C>

       Ordinary Life (including Total
       and Permanent Disability and
       Additional Accidental Death)                    93.3%        93.3%         91.8%        92.1%         92.3%
       Group                                            6.7          6.7           8.2          7.9           7.7
                                                      ------       ------        ------       ------        ------
                                                      100.0%       100.0%        100.0%       100.0%        100.0%
</TABLE>


                                       3
<PAGE>


       Certain  elements  of revenue and expense  reflect  the  requirements  of
       Financial  Accounting  Standard  (FAS) 97.  FAS 97  prescribes  a uniform
       method  by  which  life  insurance  companies  record  certain  long-term
       contracts,  specifically  annuities,  universal  life, and other interest
       sensitive  products.  This method involves  separating the premium income
       into the "premium" portion (shown in revenue) which represents  insurance
       protection purchased,  and the "deposit" portion,  which represents funds
       to be  held at  interest  for  future  uses.  Under  this  standard,  the
       "deposit"  portion of the premium received is accounted for using methods
       applicable to comparable "interest bearing obligations" of other types of
       financial institutions.

       Structured  settlement annuities sold to affiliate companies  represented
       $17,780,582  in  annuity  deposits  in  1997,  $13,504,953  in  1996  and
       $22,018,313  in 1995.  Also included in the annuity  deposits are annuity
       contracts  purchased  by the Erie  Insurance  Group  Retirement  Plan for
       Employees.  These annuity contracts purchased totaled $1,992,060 in 1997,
       $4,894,042 in 1996 and $6,024,125 in 1995.

                              Classes of Deposits
                                 Total Deposits

                                                For the year ended December 31,
<TABLE>
<CAPTION>

       Class                                       1997            1996           1995             1994            1993
       -----                                       ----            ----           ----             ----            ----
       <S>                                      <C>             <C>            <C>             <C>             <C>   

       Universal Life Deposit                   $  10,733,738   $   9,465,576  $  8,490,667    $  7,482,156    $  6,130,390
       Annuity Deposit                             58,306,640      58,250,822    66,051,230      62,048,541      50,550,323
                                                -------------   -------------  ------------    ------------    ------------
                                                $  69,040,378   $  67,716,398  $ 74,541,897    $ 69,530,697    $ 56,680,713
</TABLE>

       The Company  reinsures with other insurance  companies the portion of the
       insurance  coverage above  acceptable  retentions.  Beginning  January 1,
       1995, the retention limit on an acceptable risk was increased to $300,000
       on each  individual  life policy  written.  Prior to January 1, 1995, the
       limit was $225,000.

       The Company reinsures under a number of different reinsurance agreements.
       The primary purpose of this reinsurance is to enable the Company to write
       a policy in an amount  larger  than the risk it is  willing to assume for
       itself.  The  secondary  purposes  are  to  receive  commissions  on  the
       reinsurance  ceded and in some instances to participate in the profits of
       the reinsured business by way of an "experience rating refund."

Marketing

       The Company markets its products through  independent  agents  throughout
       Pennsylvania,   Maryland,   Virginia,   West  Virginia,   Ohio,  Indiana,
       Tennessee, North Carolina and the District of Columbia. The policies sold
       are evaluated by the Company's  Underwriting  Department which selects or
       declines applicants for insurance. Premium on policies which are accepted
       may be standard or rated, depending on the nature of the risk.

Competition

       The Company operates in a highly  competitive  industry which consists of
       numerous  stock and mutual life  insurance  companies.  A large number of
       established  insurance  companies  compete in states in which the Company
       transacts  business and many of these  companies  offer more  diversified
       lines of insurance  coverage  and have  substantially  greater  financial
       resources than does the Company. Competition is based primarily on price,
       product  features,  availability of insurance  products and the financial
       strength of the Company.

                                       4
<PAGE>


Insurance Regulation

       The Company is subject to  supervision  and  regulation  by the insurance
       departments of the states in which it does business.  Although the extent
       of the regulation  varies from state to state,  generally the supervisory
       agencies  are vested  with broad  administrative  powers  relating to the
       granting and revocation of licenses to transact  business,  regulation of
       trade practices,  licensing of agents, approval of policy forms, deposits
       of  security  for the  benefits  of policy  owners  and  investments  and
       maintenance of specified reserves and capital, all designed primarily for
       the  protection of policy  owners.  In  accordance  with the rules of the
       National Association of Insurance Commissioners,  the Company is examined
       periodically by one or more of the state supervisory agencies. The latest
       such  examination  of the  Company  was  conducted  by  the  Pennsylvania
       Insurance Department and covered the five years ended December 31, 1995.

       The  Commonwealth  of  Pennsylvania  has adopted  the minimum  risk-based
       capital  requirements on domestic insurance companies that were developed
       by the  National  Association  of  Insurance  Commissioners  (NAIC).  The
       formulas for determining the amount of risk-based capital specify various
       weighing factors that are applied to financial balances or various levels
       of  activity  based  on the  perceived  degree  of risk.  These  formulas
       determine a ratio of the company's  regulatory  total adjusted capital to
       its authorized control level risk-based  capital, as defined by the NAIC.
       Companies below specific  trigger points or ratios are classified  within
       certain levels,  each of which requires specified  corrective action. The
       NAIC levels and ratios are as follows:

                                          Ratio of Total Adjusted Capital to
NAIC Required                             Authorized Control Level Risk-Based
Regulatory Event                              Capital (Less Than or Equal to)

Company action level                        2 (or 2.5 with negative trends)
Regulatory action level                     1.5
Authorized control level                    1
Mandatory control level                      .7

       Erie Family Life has regulatory total adjusted capital of $91 million and
       a ratio of total adjusted capital to authorized  control level risk-based
       capital of 6:1 at December 31, 1997. The Company's  ratios  significantly
       exceed the minimum NAIC risk-based capital requirements.

Life Reserves

       The Company  establishes  and  maintains  actuarial  reserves to meet its
       obligations on life insurance policies and annuities.  These reserves are
       amounts which, with additions from premiums to be received on outstanding
       policies  and with  interest  on such  reserves  compounded  annually  at
       certain  assumed  rates,  are  calculated to be sufficient to meet policy
       obligations at death or maturity in accordance with the mortality  tables
       employed when the policies are issued.

       Reserves for life  insurance  and  income-paying  annuity  future  policy
       benefits  have been computed  primarily by the net level  premium  method
       with  assumptions as to anticipated  mortality,  withdrawals,  lapses and
       investment  yields.  Deferred  annuity future policy benefit  liabilities
       have  been  established  at  accumulated  values  without  reduction  for
       surrender charges.  Reserves for universal life and investment  contracts
       are based on the contract account balance,  if future benefit payments in
       excess of the account balance are not guaranteed, or the present value of
       future benefit payments when such payments are guaranteed. Variations are
       inherent  in  such  calculations  due to the  estimates  and  assumptions
       necessary in the calculations. Interest rate assumptions for non-interest
       sensitive life insurance range from 3.5% to 4% on policies issued in 1980
       and prior years and 6% to 7.25% on policies issued in 1981 and subsequent
       years. Mortality and withdrawal assumptions are based on tables typically
       used in the industry.

                                       5
<PAGE>


       Annuities  are  subject  to  varying  interest  rates  determined  at the
       discretion  of the  Company  subject to certain  minimums.  During  1997,
       annuity  deposits  earned  interest at rates ranging from 5.00% to 6.25%.
       Management believes the fair value of annuity and universal life deposits
       approximates  the amounts  recorded in the  financial  statements,  since
       these obligations are generally subject to fluctuating interest rates.

Employees

       Services of  eighty-one  full-time  Employees  are provided  through Erie
       Indemnity Company. All employees are salaried and ten are officers. These
       Employee  expenses  along with other  operating  expenses are paid by the
       Erie Indemnity  Company and  reimbursed on a monthly  basis.  None of the
       Employees are covered by collective bargaining agreements and the Company
       believes its Employee relations are good.

Other Data

                    The Company's Lapse Rate for 1997 was 9.0%.

                    Reinsurance Profitability - Not Applicable.

                    New Types of Insurance - Not Applicable.

                    Total  Insurance  In Force  for the last  five  years Net of
                    Reinsurance was:

                                1997 - $ 10,754,141,000
                                1996 - $  9,646,962,000
                                1995 - $  8,370,940,000
                                1994 - $  7,481,537,000
                                1993 - $  6,428,223,000


ITEM 2.  PROPERTIES

The Company owns no real property and no tangible  personal property used in the
operation of its business  except office  supplies and forms.  The Company does,
however,  own real property for  investment  purposes as described  under ITEM 1
INVESTMENTS. The executive and administrative offices of the Company are located
in the headquarters  office of Erie Insurance Group in Erie,  Pennsylvania.  The
Company pays other members of the group an amount  determined by an arm's length
agreement  for  office  space  and  for  the use of  facilities,  equipment  and
services.


ITEM 3.  LEGAL PROCEEDINGS

The Company is not involved in any material pending legal proceedings other than
ordinary routine litigation incidental to its business.




                                       6
<PAGE>


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters  submitted  for a vote to  shareholders  during the fourth
quarter of 1997.


ITEM 5.  MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

       Currently there is no market on which the Company's stock is traded.  The
       Company had 1,145 recordholders of Common Stock at December 31, 1997.

Date Dividends Declared    Date Dividends Paid            Dividends per Share*

February 29, 1996            April 1, 1996                          .125
May 1, 1996                  July 1, 1996                           .125
June 17, 1996                October 1, 1996                        .125
September 17, 1996           January 2, 1997                        .125
March 5, 1997                April 1,1997                           .135
April 29, 1997               July 1, 1997                           .135
June 17, 1997                October 1, 1997                        .135
September 15, 1997           January 2, 1998                        .135


*Adjusted  to reflect a  three-for-one  stock split which was  effective  May 2,
1996.


ITEM 6.  SELECTED FINANCIAL DATA

The  information  contained  in  "Selected  Financial  Data"  on  Page 14 of the
Company's 1997 Annual Report is incorporated herein by reference.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
         RESULTS OF OPERATION

The  information  set forth on pages 15 through 22 of the Company's  1997 Annual
Report is incorporated herein by reference.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The 1997 Financial Statements and the Company's  independent auditor's report on
pages 24 through 32 of the Company's 1997 Annual Report are incorporated  herein
by  reference,  as is the  unaudited  information  set forth in the Notes to the
Financial   Statements  under  the  caption  "Unaudited   Quarterly  Summary  of
Operations" on page 32.


ITEM 9.  CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                       7
<PAGE>


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>

                                            Present Principal Position with Erie
Name and Age                              Family Life and Other Material Positions
as of 04/01/98                                Held During the Last Five Years
<S>                                       <C>   

Peter B. Bartlett 3C,4,5                  Director since 1996.  Partner, Brown Brothers Harriman & Co. since
       64                                 1974; Director--Erie Insurance Company and Erie Indemnity Company,
                                          Attorney-in-Fact for Erie Insurance Exchange and Kennametal, Inc.

Samuel P. Black, III 2                    Director since 1997.  President, Treasurer and Secretary, Samuel P.
       56                                 Black & Associates, Inc.--insurance agency; President & Treasurer, Curti-Sergi
                                          Company,  life and  employee  benefits insurance    agency;    Director--Erie
                                          Insurance   Company,   Flagship   City Insurance   Company,   Erie  Insurance
                                          Property & Casualty  Company  and Erie Indemnity  Company,   Attorney-in-Fact
                                          for Erie Insurance Exchange.

J. Ralph Borneman, Jr. 3,4                Director since 1992.  President and Chief Executive Officer of Body-
       59                                 Borneman Associates Inc., insurance agency.  President Body-Borneman, Ltd. and
                                          Body-Borneman,     Inc.,     insurance agencies.   Director--Erie   Insurance
                                          Company,   Erie   Indemnity   Company, Attorney-in-Fact  for  Erie  Insurance
                                          Exchange,  Erie  Insurance  Company of New York and National Penn Bancshares.

John J. Brinling, Jr.                     Executive Vice President of the Company since December 1990.  Division
       51                                 Officer 1984-present.

Robert H. Dreyer                          Senior Vice President of the Company since 1990.  Chief Actuary 1983-
       60                                 Present.

Philip A. Garcia                          Executive Vice President and Chief Financial Officer of the Company,
       41                                 Erie Insurance Company, Erie Indemnity Company, Attorney-in-Fact for Erie
                                          Insurance   Exchange,   Flagship  City Insurance   Company,   Erie  Insurance
                                          Property & Casualty  Company  and Erie Insurance  Company  of New York  since
                                          October  1997.  Senior Vice  President and  Controller  and Division  Officer
                                          1993 - October  1997.  Vice  President and  Manager  of the  Life  Accounting
                                          Department  of the  Company  prior  to 1993.   Director   -   Flagship   City
                                          Insurance   Company,   Erie  Insurance Property & Casualty  Company  and Erie
                                          Insurance Company of New York.



<FN>
2 Member of Audit Committee
3 Member of Executive Compensation Committee
4 Member of Nominating Committee
5 Member of Investment Committee
C Committee Chairman
</FN>
</TABLE>
                                       8

<PAGE>

<TABLE>
<CAPTION>

                                          Present Principal Position with Erie
Name and Age                              Family Life and Other Material Positions
as of 04/01/98                                Held During the Last Five Years
<S>                                       <C> 

Patricia A. Goldman 2,4                   Director since 1996.  Retired; Senior Vice President for Communications,
       56                                 USAir, Inc. from 1988 to 1994; Director, Erie Insurance Company, Erie Indemnity
                                          Company, Attorney-in-Fact for Erie Insurance Exchange and Crown Central Petroleum
                                          Corporation.

Susan Hirt Hagen 1,*                      Director since 1980.  Managing Partner, Hagen, Herr & Peppin, Group
       62                                 Relations Consultants since 1990; Associate, Center for Practice of Conflict
                                          Management  1972-1990;  Director--Erie Insurance  Company and Erie  Indemnity
                                          Company,   Attorney-in-Fact  for  Erie Insurance   Exchange,    since   1980;
                                          Director,  Erie  Insurance  Property & Casualty   Company,   Erie   Insurance
                                          Company of New York, and Flagship City Insurance Company since 1995.

Thomas B. Hagen *                         Director since 1980.  Chairman, Custom Engineering Co., Chairman,
       62                                 Team Pennsylvania Foundation since 1997; Secretary of Commerce and Secretary of
                                          Community and Economic  Development of the Commonwealth of Pennsylvania  1995
                                          to  1997;  Special  Consultant  to the Chairman  of the  Board  of  the  Erie
                                          Indemnity  Company,   Attorney-in-Fact for the Erie  Insurance  Exchange from
                                          1993 to 1995;  Chairman  of the  Board and  Chief  Executive  Officer  of the
                                          Erie Indemnity Company,  Attorney-in-Fact for the Erie
                                          Insurance  Exchange,  Erie Family Life Insurance  Company and Erie  Insurance
                                          Company  from  1990,  and of  Flagship City   Insurance   Company   and  Erie
                                          Insurance Property & Casualty Company, from 1992 and 1993,  respectively,  to
                                          1993;  President of the Erie Indemnity Company, Attorney-in-Fact for the Erie
                                          Insurance  Exchange and Erie Insurance Company and Executive  Vice  President
                                          of Erie Family Life Insurance  Company from 1982 to 1990; Director,  the Erie
                                          Indemnity  Company,   Attorney-in-Fact for the Erie  Insurance  Exchange  and
                                          Erie Insurance Company and GPU, Inc.


<FN>
1 Member of Executive Committee
2 Member of Audit Committee
4 Member of Nominating Committee
* F. William Hirt is the brother of Susan Hirt Hagen and the brother-in-law of
  Thomas B. Hagen.  Susan Hirt Hagen is the wife of Thomas B. Hagen.
</FN>
</TABLE>
                                       9

<PAGE>

<TABLE>
<CAPTION>

                                          Present Principal Position with Erie
Name and Age                              Family Life and Other Material Positions
as of 04/01/98                                Held During the Last Five Years
<S>                                       <C>  

F. William Hirt 1C,*                      Chairman of the Board.  Director since 1967.  Chairman of the Board of
       72                                 the Erie Insurance Company, Erie Indemnity Company, Attorney-in-Fact for Erie
                                          Insurance  Exchange,   Erie  Insurance Property   &  Casualty   Company   and
                                          Flagship City Insurance  Company since September 1993;  Chairman of the Board
                                          of Erie Insurance  Company of New York since  April  1994.  Chairman  of  the
                                          Executive Committee of the Company and the    Erie     Indemnity     Company,
                                          Attorney-in-Fact  for  Erie  Insurance Exchange since November 1990;  Interim
                                          President and Chief Executive  Officer of   the   Company,   Erie   Indemnity
                                          Company,   Attorney-in-Fact  for  Erie Insurance  Exchange,   Erie  Insurance
                                          Company,  Erie  Insurance  Property  & Casualty   Company,    Flagship   City
                                          Insurance  Company and Erie  Insurance Company  of New York from  January  1,
                                          1996 to February 12, 1996; Chairman of the Board, Chief Executive Officer and
                                          Chairman of the Executive Committee of the Company,  Erie Indemnity  Company,
                                          Attorney-in-Fact  for  Erie  Insurance Exchange  and Erie  Insurance  Company
                                          for  more   than  five   years   prior thereto;    Director--Erie   Insurance
                                          Company,   Flagship   City   Insurance Company,   Erie   Indemnity   Company,
                                          Attorney-in-Fact  for  Erie  Insurance Exchange,  Erie  Insurance  Property &
                                          Casualty   Company,   Erie   Insurance Company   of  New  York  and   Integra
                                          Financial Corporation.

Dr. Irvin H. Kochel 2                     Director since 1970.  Retired Assistant Vice President Emeritus, The
       74                                 Pennsylvania State University; Director--Erie Insurance Company and Erie Indemnity
                                          Company, Attorney-in-Fact for Erie Insurance Exchange.

Edmund J. Mehl 1,2C,4                     Director since 1969.  Retired Chairman and Chief Executive Officer,
       74                                 Dispatch Printing, Inc.; Director--Erie Insurance Company, Erie Indemnity Company,
                                          Attorney-in-Fact  for  Erie  Insurance Exchange,   Flagship  City   Insurance
                                          Company,  Erie  Insurance  Property  & Casualty  Company  and Erie  Insurance
                                          Company of New York.


<FN>
1 Member of Executive Committee
2 Member of Audit Committee
4 Member of Nominating Committee
C Committee Chairman
* F. William Hirt is the brother of Susan Hirt Hagen and the brother-in-law of
  Thomas B. Hagen.  Susan Hirt Hagen is the wife of Thomas B. Hagen.
</FN>
</TABLE>
                                       10

<PAGE>

<TABLE>
<CAPTION>

                                          Present Principal Position with Erie
Name and Age                              Family Life and Other Material Positions
as of 04/01/98                                Held During the Last Five Years
<S>                                       <C>  

Stephen A. Milne 1,5                      President, Chief Executive Officer and Director since February 12, 1996.
      49                                  President and Chief Executive Officer of the Erie Insurance Company,
                                          Erie Indemnity Company,  Attorney-in-Fact  for  Erie  Insurance
                                          Exchange,   Flagship  City   Insurance Company,  Erie  Insurance  Property  &
                                          Casualty  Company  and Erie  Insurance Company  of  New  York   since   1996;
                                          Executive  Vice  President of the Erie Insurance   Company,   Erie  Indemnity
                                          Company,   Attorney-in-Fact  for  Erie Insurance   Exchange,   Flagship  City
                                          Insurance   Company,   Erie  Insurance Property & Casualty  Company  and Erie
                                          Insurance    Company   of   New   York 1994-February       1996.       Owner,
                                          Bennett-Damascus    Insurance   Agency March  1991-December  31, 1993; Senior
                                          Vice  President-Agency  Division  Erie Insurance       Group       1988-1991.
                                          Director--Erie Insurance Company, Erie Indemnity  Company,   Attorney-in-Fact
                                          for Erie  Insurance  Exchange and Erie Insurance   Company   of   New   York,
                                          Flagship  City  Insurance  Company and Erie  Insurance  Property  &  Casualty
                                          Company.

Timothy G. NeCastro                       Senior Vice President and Controller of the Company, Erie Insurance
      37                                  Company, Erie Indemnity Company, Attorney-in-Fact for Erie Insurance
                                          Exchange,   Flagship  City   Insurance Company,  Erie  Insurance  Property  &
                                          Casualty  Company  and Erie  Insurance Company  of New  York  since  November
                                          1997.

John M. Petersen 1,5                      Director since 1980.  Retired; President and Chief Executive Officer of the
      69                                  Erie Indemnity Company, Attorney-in-Fact for Erie Insurance Exchange, Erie Family
                                          Life Insurance Company, Erie Insurance Company,   Flagship   City   Insurance
                                          Company and Erie Insurance  Property & Casualty Company from 1993 to 1995 and
                                          Erie  Insurance  Company  of New  York from 1994-1995;  President,  Treasurer
                                          and  Chief  Financial  Officer  of the Erie Indemnity Company,
                                          Attorney-in-Fact    for    the    Erie Insurance  Exchange,   Erie  Insurance
                                          Company and Erie Family Life Insurance Company  from  November  1990,  and of
                                          Flagship  City  Insurance  Company and Erie  Insurance  Property  &  Casualty
                                          Company    since    1992   and   1993, respectively,   to   September   1993;
                                          President,    Treasurer    and   Chief Financial  officer of Erie Family Life
                                          Insurance  Company and Executive  Vice President,    Treasurer    and   Chief
                                          Financial    Officer   of   the   Erie Indemnity  Company,   Attorney-in-Fact
                                          for the Erie  Insurance  Exchange  and Erie  Insurance  Company for more than
                                          five years  prior  thereto;  Director, the Erie Insurance  Company,  Flagship
                                          City Insurance Company, Erie Indemnity Company,   Attorney-in-Fact  for  Erie
                                          Insurance  Exchange,   Erie  Insurance Property  &  Casualty  Company,   Erie
                                          Insurance  Company  of New  York,  and Spectrum Control.


<FN>
1 Member of Executive Committee
5 Member of Investment Committee
</FN>
</TABLE>
                                       11

<PAGE>

<TABLE>
<CAPTION>

                                          Present Principal Position with Erie
Name and Age                              Family Life and Other Material Positions
as of 04/01/98                                Held During the Last Five Years
<S>                                       <C> 

Seth E. Schofield 3,4C                    Director since 1991.  Retired; Chairman of the Board and Chief Executive
       58                                 Officer, USAir, Inc. from 1992 to January 1996; President and Chief Executive
                                          Officer,  USAir,  Inc.  from  1991  to 1992;  President  and Chief  Operating
                                          Officer,  USAir,  Inc.  from  1990  to 1991; Executive Vice President, USAir,
                                          Inc.  from 1989 to 1990;  Chairman  of the  Board  and  a  Director,  Greater
                                          Pittsburgh    Chamber   of   Commerce; Director,  the Erie Indemnity Company,
                                          Attorney-in-Fact  for  Erie  Insurance Exchange,  Erie Insurance Company, PNC
                                          Bank,  N.A., USX  Corporation,  Calgon Carbon Corporation,  and Desai Capital
                                          Management.

Jan R. Van Gorder 1                       Senior Executive Vice President, Secretary and General Counsel since
       50                                 1990.  Director since September 1990.  Senior Executive Vice President, Secretary
                                          and   General   Counsel  of  the  Erie Insurance   Company,   Erie  Indemnity
                                          Company,   Attorney-in-Fact  for  Erie Insurance  Exchange since 1990, and of
                                          Flagship  City  Insurance  Company and Erie  Insurance  Property  &  Casualty
                                          Company    since    1992   and   1993, respectively  and  of  Erie  Insurance
                                          Company of New York since  April 1994; Senior Vice  President,  Secretary and
                                          General  Counsel of the Company,  Erie Insurance  Company and Erie  Indemnity
                                          Company,   Attorney-in-Fact  for  Erie Insurance  Exchange for more than five
                                          years  prior  thereto;  Director--Erie Insurance   Company,   Flagship   City
                                          Insurance   Company,   Erie  Insurance Property  &  Casualty  Company,   Erie
                                          Insurance Company of New York and Erie Indemnity  Company,   Attorney-in-Fact
                                          for Erie Insurance Exchange.

Harry H. Weil 2,3,5C                      Director since 1995.  Senior Partner, Reed, Smith, Shaw & McClay,
       64                                 Attorneys, since 1980, Partner 1969 to 1980, Associate 1964 to 1969;
                                          Director--Erie Indemnity Company, Attorney-in-Fact for Erie Insurance Exchange,
                                          Erie Insurance Company and Calgon Carbon Corporation

Douglas F. Ziegler                        Senior Vice President, Treasurer and Chief Investment Officer of the
       47                                 Company since October 1993.  Senior Vice President, Treasurer and Chief Investment
                                          Officer of the Erie Insurance Company, Erie Indemnity Company,
                                          Attorney-in-Fact  for  Erie  Insurance Exchange,   Flagship  City   Insurance
                                          Company and Erie Insurance  Property & Casualty  Company  and Erie  Insurance
                                          Company  of New York.  Director - Erie Insurance Company of New York.

<FN>
1 Member of Executive Committee
2 Member of Audit Committee
3 Member of Executive Compensation Committee
4 Member of Nominating Committee
5 Member of Investment Committee
C Committee Chairman
</FN>
</TABLE>
                                       12

<PAGE>


ITEM 11.  EXECUTIVE COMPENSATION

Summary Compensation Table

The  Company is a member of an  insurance  holding  company  system  pursuant to
Pennsylvania   law  under  which  insurance   companies  are  required  to  have
nominating,  audit and  executive  compensation  committees  composed  solely of
directors who are not officers,  employees or  controlling  shareholders  of the
Company or any entity controlling the Company.  Insurance  companies can satisfy
this  requirement  if the  insurance  company is  controlled  by an insurer or a
publicly held corporation that has committees that comply with this requirement.
Erie  Indemnity  Company,  holder of 21.6% of the Company's  stock  directly and
52.2% of the Company's stock as  attorney-in-fact  for Erie Insurance  Exchange,
has committees which meet these requirements.

The following table sets forth the compensation  paid by the Company during each
of the three fiscal years ended December 31, 1997,  1996, and 1995, to the chief
executive  officer of the  Company  and the four other most  highly  compensated
executive  officers of the  Company  during  1997 for  services  rendered in all
capacities to the Company,  Erie Indemnity Company, Erie Insurance Exchange (the
"Exchange") and their subsidiaries and affiliates.

                                          Annual Compensation

Name and                                            Other Annual    All Other(2)
Principal Position      Year   Salary    Bonus(1)   Compensation    Compensation

Stephen A. Milne        1997  $539,462   $174,697    $  1,014       $  66,219
Chief Executive         1996   467,305     39,351       1,014          26,020
Officer                 1995   245,611     26,623         927          39,993

Jan R. Van Gorder       1997  $321,032   $103,469    $  2,268       $  26,263
Executive Vice          1996   312,555     25,433       1,014          26,431
President, Secretary    1995   296,095     26,725       1,029          29,625
& General Counsel

John J. Brinling,       1997  $214,395   $ 68,733    $  2,268       $  27,209
Jr., Executive          1996   202,126     34,652         946          24,098
Vice President of       1995   184,104     20,853         877          28,837
EFL

Philip A. Garcia        1997  $160,703   $ 58,744   $     383       $   4,470
Executive Vice          1996   142,255      9,039         332           3,966
President & Chief       1995   132,617      7,905         201           3,114
Financial Officer(3)

Dennis M. Geib          1997  $166,533   $ 52,127   $   1,943       $   4,094
Senior Vice             1996   158,261     10,157       1,900           4,072
President               1995   148,365      8,868       1,841           3,300


(1)    The amounts  indicated in the bonus column above represent amounts earned
       by the named executives  during 1997 under the Company's annual incentive
       plan.  The  purpose of the annual  incentive  plan is to promote the best
       interests of the Erie Insurance Group while enhancing  shareholder  value
       of the Company by basing a portion of selected employees' compensation on
       the  performance of such employee and the Company.  Performance  measures
       are  established  by the Executive  Compensation  Committee  based on the
       attainment of individual  performance  goals and Company  financial goals
       compared to a selected peer group.

                                       13
<PAGE>

(2)    Amounts shown include matching contributions made by the Company pursuant
       to the Company's  Employee Savings Plan,  premiums paid by the Company on
       behalf  of the  named  individuals  on the Split  Dollar  Plan  insurance
       policies and  miscellaneous  expense  reimbursements.  For the year 1997,
       contributions  made to the Employee  Savings  Plans  amounted to $12,194,
       $8,676,  $6,432,  $4,470,  and  $4,094 on behalf of  Messrs.  Milne,  Van
       Gorder,  Brinling,  Garcia  and Geib,  respectively.  For the year  1996,
       contributions to the Employee  Savings Plan amounted to $11,729,  $8,689,
       $6,026,  $3,966,  and  $4,072 on behalf of  Messrs.  Milne,  Van  Gorder,
       Brinling,  Garcia and Geib. For the year 1995,  contributions made to the
       Employee Savings Plan amounted to $5,424,  $6,849,  $4,910,  $3,114,  and
       $3,300 on behalf of Messrs. Milne, Van Gorder, Brinling, Garcia and Geib,
       respectively.  Premiums paid during 1997 for Split Dollar Life  insurance
       policies  for  Messrs.  Milne,  Van  Gorder,  Brinling,  Garcia and Geib,
       respectively,  are as follows:  $51,531, $17,587, $17,700, $-0- and $-0-.
       Premiums  paid during 1996 for Split Dollar Life  insurance  policies for
       Messrs. Milne, Van Gorder, Brinling,  Garcia and Geib, respectively,  are
       as follows:  $14,291,  $17,742,  $18,072,  $-0- and $-0-.  Premiums  paid
       during 1995 for Split Dollar Life insurance  policies for Messrs.  Milne,
       Van Gorder, Brinling,  Garcia and Geib are as follows:  $28,786, $17,420,
       $18,144,  $-0- and $-0-.  The Company is entitled to recover the premiums
       from any proceeds paid on such Split Dollar Life  insurance  policies and
       has  retained a  collateral  interest in each policy to the extent of the
       premiums  paid  with  respect  to  such  policies.  For  the  year  1997,
       miscellaneous  expense  reimbursements  amounted to $2,494, $-0-, $3,077,
       $-0- and $-0- for Messrs. Milne, Van Gorder,  Brinling,  Garcia and Geib.
       For the year 1996,  no  miscellaneous  expenses were incurred for Messrs.
       Milne,  Van  Gorder,  Brinling,  Garcia  and  Geib.  For the  year  1995,
       miscellaneous expense reimbursements  amounted to $5,783, $5,356, $5,783,
       $-0- and $-0- for Messrs. Milne, Van Gorder,  Brinling,  Garcia and Geib,
       respectively.

 (3)   Mr. Garcia became  Executive Vice President and Chief Financial  Officer
       on October 2, 1997.

Agreements with Executive Officers

Upon the recommendation of the Executive Compensation Committee of the Company's
Board of Directors the Company entered into  employment  agreements in December,
1997 with the following four senior executive  officers of the Company:  John J.
Brinling,  Jr.,  Executive  Vice  President  of the  Company;  Stephen A. Milne,
President  and  Chief  Executive  Officer;  Philip  A.  Garcia,  Executive  Vice
President  and Chief  Financial  Officer of the Company,  and Jan R. Van Gorder,
Senior  Executive Vice President,  Secretary and General Counsel of the Company.
The employment agreements have the following principal terms:

(a)      For Mr. Milne a four year term  expiring in December,  2001 and for the
         other executives a two year term expiring in December, 1999, unless the
         agreement is theretofore  terminated in accordance with its terms, with
         or without  cause,  or due to the disability or death of the officer or
         notice of  non-renewal is given by the Company 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 the Company'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 the Company and the
         compensation of the executive in such  circumstances.  The agreements
         provide  generally,  among other things,  that if the  employment of an
         executive is terminated  without Cause (as defined in the agreement)
         by the Company or by the executive  for Good Reason (as defined in the
         agreement)  then the  executive  shall be entitled to receive an amount
         equal to the sum of:  (i) three  times his highest  annual base salary
         during the preceding  three years plus an amount equal to the total of
         the  executive's  highest awards during the preceding three years under
         the Company's  bonus and other  short-term  incentive  compensation
         plans;  (ii) any  award or other  compensation  to which the  executive
         is  entitled  under  any of the  Company's  incentive  compensation
         programs and employee  benefit  plans as well as for the  continuing
         participation,  for a period of three years following  termination, 
         in all life, medical and dental insurance programs and other benefit
         plans to the extent the  executive  and his  dependents  were  eligible
         to  participate  in such  programs  immediately  prior to his
         termination;  and (iii)  accrued  benefits  under the Company's
         Supplemental  Executive  Retirement  Plan become immediately vested and
         nonforfeitable.

                                       14
<PAGE>

(e)      Provisions relating to confidentiality and non-disclosure following an
         executive's termination; and

(f)      An  agreement  by the  executive  not to compete with the Company for a
         period of one year following his  termination,  unless his  termination
         was 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.
<TABLE>
<CAPTION>


                                  LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
--------------------------------------------------------------------------------------------------------------------------
Name              Number of Shares,                   Performance                          Estimated Future Payouts
                    Shares, Units or                or Other Period                            Under Non-Stock
                    Other Rights (#)               Until Maturation                            Price-Based Plans
                                                        or Payout
--------------------------------------------------------------------------------------------------------------------------
                  Phantom Share Units                                  Threshold          Target          Maximum(1)
--------------------------------------------------------------------------------------------------------------------------
<S>                          <C>                      <C>                  <C>            <C>               <C>

Milne, S.                    45,839                   1997-1999            -0-            $188,812
Van Gorder, J.               27,279                   1997-1999            -0-            $112,361
Brinling, J.                 18,218                   1997-1999            -0-            $ 75,038           NONE
Garcia, P.                   12,719                   1997-1999            -0-            $ 52,390
Geib, D.                     14,120                   1997-1999            -0-            $ 58,160

</TABLE>

The  Company has  established  a  Long-Term  Incentive  Plan that is designed to
enhance the growth and  profitability  of the Company by providing the incentive
of long term rewards to key  employees  who are capable of having a  significant
impact on the  performance  of the Company;  to attract and retain  employees of
outstanding  competence  and ability;  and to further align the interest of such
employees  with  those  of  shareholders  of the  Company.  Each  of  the  named
executives  has been granted  awards of phantom  share units under the Company's
Long-Term Incentive Plan based upon a target award calculated as a percentage of
the executives' base salary.  The total value of any phantom share units will be
determined  at the end of the  performance  period  based upon the growth in the
Company's  retained  earnings.  Each  executive will then be entitled to receive
shares of  restricted  Class A Common  Stock of the Company  equal to the dollar
value of the  phantom  share  units at the end of the  performance  period.  The
vesting period for the restricted Class A common shares issued to each executive
is three years after the end of the performance  period.  If an executive ceases
to be an employee  prior to the end of the  performance  period,  the  executive
forfeits  all  phantom  share units  awarded.  If an  executive  ceases to be an
employee  prior to the end of the vesting  period,  the  executive  forfeits all
unvested restricted shares previously granted.

(1)      There  is no  maximum  payout  limitation  for a  specific  performance
         period.  However,  the maximum value of phantom share units that may be
         earned by any named executive in any year shall not exceed $500,000.


                                       15
<PAGE>


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 Supplemental Employee Retirement Plan.

                            PENSION PLAN TABLE

                                    Years of Service
Remuneration      15           20        25          30            35
--------------------------------------------------------------------------
$ 200,000       60,000       80,000    100,000      120,000      120,000
  250,000       75,000      100,000    125,000      150,000      150,000
  300,000       90,000      120,000    150,000      180,000      180,000
  350,000      105,000      140,000    175,000      210,000      210,000
  400,000      120,000      160,000    200,000      240,000      240,000
  450,000      135,000      180,000    225,000      270,000      270,000
  500,000      150,000      200,000    250,000      300,000      300,000
  550,000      165,000      220,000    275,000      330,000      330,000
  600,000      180,000      240,000    300,000      360,000      360,000
  650,000      195,000      260,000    325,000      390,000      390,000
  700,000      210,000      280,000    350,000      420,000      420,000
  750,000      225,000      300,000    375,000      450,000      450,000

The compensation covered by such plan is the base salary reported in the Summary
Compensation Table.

Under  the  pension  plan,  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: Stephen A. Milne - 21 years, Jan R. Van Gorder
- 17 years,  John J. Brinling,  Jr. - 30 years,  Philip A. Garcia - 17 years and
Dennis Geib - 17 years.

The benefits under such plan 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 Internal  Revenue Code of 1986,  as amended
(the "Code"). Beginning in 1994, the Code prohibits the inclusion of earnings in
excess of $150,000 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  $130,000,  but adjusted  periodically  for
cost-of-living  increases)  that  can be  paid  to  each  eligible  employee.  A
Supplemental  Employee  Retirement Plan for senior management is in effect which
provides benefits in excess of the earnings  limitations imposed by the Internal
Revenue  Code of 1986 (as amended)  similar to these  provided to all other full
time employees as if the IRS limitations were not in effect.  These benefits are
incorporated into the Pension Plan Table.

Director Compensation

The annual  retainer for  directors of all members of the 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.  In addition,  all  directors  are  reimbursed  for their  expenses
incurred in attending  meetings.  Officers of the Company who serve as directors
are not  compensated  separately  for  attendance  at  meetings  of the Board of
Directors  and its  committees.  The total  amount  allocated to the Company for
directors  fees in 1997 was  $111,068.  Director  Petersen  also is  compensated
pursuant to a consulting arrangement as disclosed in Item 13.


                                       16
<PAGE>


Compensation Committee Interlocks and Insider Participation

The Executive  Compensation Committee (the "Committee") of the Company presently
consists  of Peter B.  Bartlett,  Chairman,  J.  Ralph  Borneman,  Jr.,  Seth E.
Schofield  and Harry H. Weil.  No member of the Committee is a former or current
officer or  employee of the Company or any of its  affiliates.  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 Committee of the
Company 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  Committee of the Company.  Mr.  Borneman is the  President  and a
principal shareholder of Body-Borneman Associates, Inc., Body-Borneman, Inc. and
Body-Borneman,   Ltd.,  all  of  which  are   independent   insurance   agencies
representing  a number of  insurers,  including  the Company  and its  insurance
affiliates.

Report of the Executive Compensation Committee of the Company

The Committee is charged with the duty of recommending to the Board of Directors
the  compensation  of the three  highest  paid  officers of the Company and such
other officers as are determined by the Board of Directors,  recommending to the
Board of Directors all forms of bonus compensation  including incentive programs
that  would  be  appropriate  for  the  Company  and  to  undertake  such  other
responsibilities as may be delegated to it by the Board of Directors.  The Board
has authorized the  Compensation  Committee to consider the  compensation of the
four highest paid officers, including the CEO. The Committee is composed of four
directors  who  are not  officers  or  employees  of the  Company  or any of its
affiliates.  The  purpose  of  the  Committee  is to  determine  the  level  and
composition of compensation that is sufficient to attract and retain top quality
executives for the Company.

The  objectives  of the  executive  compensation  practices  are to (1) attract,
reward and retain key executive talent and (2) to motivate executive officers to
perform to the best of their  abilities and to achieve  short-term and long-term
corporate  objectives  that will  contribute  to the overall  goal of  enhancing
stockholder and policyholder  value. To that end,  compensation  comparisons are
made to benchmark  positions at other insurers in terms of  compensation  levels
and composition of the total compensation mix.

Under  federal  tax laws,  the  Company  is not  allowed a  federal  income  tax
deduction  for  compensation,  under  certain  circumstances,  paid  to  certain
executive  officers  to the extent  that  compensation  exceeds  $1 million  per
officer in any fiscal year. No officer of the Company has received  compensation
in excess of $1 million in any fiscal year to date. The  Compensation  Committee
may consider  adopting policies with respect to this limitation on deductibility
when appropriate.

The  Committee  reviewed the salary ranges and base salaries of the four highest
paid executives  including the Chief Executive  Officer,  in 1997. The Committee
has position  descriptions  for the four highest paid executives of the Company,
including the Chief Executive  Officer,  which define the  responsibilities  and
duties of each position. The position descriptions also delineate the functional
areas of accountability  and the  qualifications  and skills required to perform
such  responsibilities  and duties. The Committee then reviews the salary ranges
for the  Chief  Executive  Officer  and the  other  three  highest  paid  senior
executives,  comparing  the ranges to third  party  data  compiled  for  similar
positions  with other  property and casualty  insurers.  In reviewing the salary
ranges for the four  highest  paid  executives,  including  the Chief  Executive
Officer,  the  Committee  references  Sibson's  Management  Compensation  Survey
published annually by Sibson & Company, Inc., which summarizes compensation data
for more than 100 insurance  companies.  The data is reported by position and by
company asset size and by premium  volume.  The unique aspects of each position,
its duties and  responsibilities,  the effect on the performance of the Company,
the  number  of  employees  supervised  directly  and  other  criteria  are also
considered in setting the base salaries. The Committee also secured the services
of  Towers  Perrin,  a  nationally  recognized  consulting  firm  with  specific
expertise in the insurance industry to make recommendations  regarding executive
compensation.


                                       17
<PAGE>


The  level  of  compensation  for each  executive  reflects  his or her  skills,
experience and job performance.  Normally, base salary will not be less than the
minimum for the salary range  established  for each position.  Executives with a
broader range of skills,  experience and consistently  high performance with the
Company may receive  compensation  above the midpoint for the established salary
range.

Compensation  for the Chief  Executive  Officer  consists  primarily  of salary,
annual incentive and long-term incentive  payments,  and minor perquisites which
amount to less than 10% of the Chief Executive  Officer's  salary and bonus. The
Board approved adoption of an annual incentive plan and long-term incentive plan
for  senior   executives  of  the  Company  as   recommended  by  the  Executive
Compensation  Committee  at its  meeting of March 11,  1997.  The purpose of the
annual  incentive  plan is to promote the best  interests  of the Company and to
promote the  attainment of  significant  business  objectives for the Company by
basing a portion  of the  executives'  compensation  on the  attainment  of both
premium growth and underwriting  profitability  goals. The annual incentive plan
will be paid in cash only.

Annual  Incentive  Plan  target  award  levels,  expressed  as a percent of base
salary,  are established  annually by the Executive  Compensation  Committee and
approved by the Board of Directors. Payments under the Annual Incentive Plan are
based  on  a  combination  of  individual  executive   performance  and  company
performance.

The Long-Term  Incentive  Program,  which was approved by shareholders April 29,
1997,  is designed  to maximize  returns to  stockholders  by linking  executive
compensation to the overall profitability of the Company.  Target award amounts,
expressed as a percentage of base salary,  are determined by comparisons to peer
companies and approved by the Executive  Compensation Committee and the Board of
Directors.

Performance  factors  applicable  to the Company,  such as property and casualty
insurance  loss  ratios,   investment   portfolio   returns,   overall   company
profitability,  as well as other factors are  considered in evaluating the Chief
Executive  Officer's  performance.  Such performance  factors were considered in
approving Mr. Milne's 1997 compensation.

Compensation of the next three most highly compensated individuals is determined
by the Committee and is based upon the factors and processes enumerated, i.e., a
determination  of a salary  range based upon market data and  evaluation  of the
executive  with  respect  to the  executive's  job  description  and  his or her
position within the salary range.

Compensation  of the next highest paid  executives  (other than the four highest
paid executives) is based upon the Company's  established standard  compensation
policies and is not determined by the Committee.

Erie Indemnity Company Executive Compensation Committee:

                Peter B. Bartlett, Chairman
                J. Ralph Borneman, Jr.
                Seth E. Schofield
                Harry H. Weil



                                       18

<PAGE>


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of 2/28/98

(a)
       Name & Address                   Shares
       of Beneficial                 Beneficially                  Percent of
           Owner                        Owned                         Class

  Erie Indemnity Company            2,043,900(1)                    21.6%(1)
  100 Erie Insurance Place              Direct
  Erie, PA  16530

  Erie Insurance Exchange           4,932,900(1)                    52.2%(1)
  100 Erie Insurance Place              Direct
  Erie, PA

(b) Shares  beneficially  owned  directly or  indirectly  by all  Directors  and
Officers:

    Name & Address                        Shares
      of Beneficial                    Beneficially                Percent of
          Owner                           Owned                      Class


  Peter B. Bartlett                                 0                   --
  65 Egbert Street
  Bay Head, NJ 08742

  Samuel P. Black, III                        132,397                  1.40%
  1091 Dutch Road
  Fairview, PA  16415

  J. Ralph Borneman                             1,536                   .02%
  160 N. Funk Road
  Boyertown, PA  19512

  Patricia A. Goldman                             100                    --
  3026 1/2 Q Street, NW
  Washington, DC 20007

  Susan Hirt Hagen                                300                    --
  5727 Grubb Rd.
  Erie, PA  16506

  Thomas B. Hagen                             154,482                  1.63%
  5727 Grubb Rd.
  Erie, PA  16506

  F. William Hirt                             167,034                  1.77%
  3270 Kingston Court
  Erie, PA  16506

  Dr. Irvin H. Kochel                           6,249                   .07%
  4637 Reese Road
  Erie, PA  16510

                                       19
<PAGE>


 (b) Shares  beneficially  owned  directly or  indirectly  by all  Directors and
Officers:

     Name & Address                       Shares
     of Beneficial                     Beneficially                Percent of
         Owner                            Owned                       Class

  Edmund J. Mehl                               12,150                 .13%
  504 Frontier Dr.
  Erie, PA  16505

  Stephen A. Milne                                200                  --
  100 Culbertson Drive
  Lake City, PA 16423

  John M. Petersen                             89,141                 .94%
  124 Voyageur Dr.
  Erie, PA  16505

  Seth E. Schofield                                 0                  --
  8600 South Ocean Drive #1106
  Jensen Beach, FL 34957

  Jan R. Van Gorder                                75                  --
  6796 Manchester Beach Road
  Fairview, PA  16415

  Harry H. Weil                                   100                  --
  7 Foxwood Drive
  Pittsburgh, PA   15238

  John J. Brinling, Jr.                         1,260                 .01%
  1522 Sumner Drive
  Erie, PA  16505

  Robert H. Dreyer                                600                 .01%
  465 Hawthorne Trace
  Fairview, PA  16415

  Philip Alan Garcia                            1,275                 .01%
  786 Stockbridge Drive
  Erie, PA  16505

  Timothy G. NeCastro                               0                  --
  124 West 37th Street
  Erie, PA  16508

  Douglas F. Ziegler                              270                  --
  378 Ridgeview Drive
  Erie, PA  16505

  Officers and directors
  as a group (19 persons)                     567,169(2)             6.00%(2)

                                       20
<PAGE>


     (1) The Exchange is a reciprocal insurance exchange controlled by its
         subscribers, each of whom has designated Erie Indemnity Company as
         such subscriber's attorney-in-fact for certain purposes, including
         Indemnity's holding of Common Stock of the Company.  76.2% of the
         outstanding voting stock of Erie Indemnity Company is owned
         beneficially by a trust established by H. O. Hirt, the father of
         F. William Hirt and Susan H. Hagen and the father-in-law of Thomas B. 
         Hagen.  Mr. Hirt and Mrs. Hagen are beneficiaries of the trust and are
         co-trustees with Mellon Bank, N.A.  An additional 13.4% of the  Erie
         Indemnity Company voting stock is beneficially owned by Samuel P.
         Black, III.

     (2) Includes direct and indirect  beneficial  ownership and shares owned by
         and with spouses.

(c)  There are no contractual arrangements known to the Company which may result
     in a change in control of the Company.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Directors  Black and Borneman are officers and  principal  shareholders  of
     insurance  agencies  which receive  insurance  commissions  in the ordinary
     course of business  from Erie Family Life and its  affiliates in accordance
     with such companies  standard  commission  schedules and agents' contracts.
     Such payments to the agencies for commissions written on insurance policies
     from the  property and  casualty  affiliated  insurers and Erie Family Life
     Insurance Company amounted to $2,540,612 and $626,760 for the Body-Borneman
     Agency and the Black and Associates Agency respectively.  Of these amounts,
     the Company paid  commissions of $108,845 to the  Body-Borneman  Agency and
     $58,668 to the Black and Associates Agency in 1997.

     Director  Mehl is the  retired  Chairman  and Chief  Executive  Officer  of
     Dispatch  Printing,  Inc., a company owned by his family members.  Payments
     for printing  services from the company,  and its  affiliates,  to Dispatch
     Printing, Inc. amounted to $65,507 in 1997.

     Director  and former  President  and CEO,  and  previous  Chief  Investment
     Officer of the Erie Insurance  Group of Companies,  John M.  Petersen,  who
     retired as an employee of the Company on December 31, 1995,  entered into a
     consulting  arrangement with the Company  effective  January 2, 1996. Under
     the  terms of the  arrangement,  the  Company  engaged  Mr.  Petersen  as a
     consultant to furnish the Company,  the Erie Insurance  Exchange,  and Erie
     Indemnity  Company and its pension  trust,  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 stock under management,
     is paid to Mr.  Petersen.  The  Company  also  pays 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 1997,  was $2,836,883 of which $30,393 was allocated to the
     Company.



                                        21

<PAGE>


                                                            PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)       (1) The following  financial  statements of the Company and the report
          of independent certified public accountants are incorporated herein by
          reference  to pages 24 through 32 in the  Company's  annual  report to
          shareholders for the year ended December 31, 1997.

               Independent Auditor Report
               Statements  of  Financial  Position - December  31, 1997 and 1996
               Statements of Operations  for the years ended  December 31, 1997,
                 1996  and 1995
               Statements of Cash Flows for the years ended December  31, 1997,
                 1996 and 1995
               Statements  of  Shareholders' Equity for the years ended
                 December 31, 1997, 1996 and 1995
               Notes to Financial Statements

          (2) The  following  financial  statement  schedules  are  included in
          this report on FORM 10-K:

                                                                      Page

               Independent Auditors' Report on Schedules               25

               Schedule I - Summary of Investments other than
               investments in related parties                          26

               Schedule V - Supplementary Insurance Information        27

               Schedule VI - Reinsurance                               28

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


                                       22
<PAGE>


      (3) Exhibits:

Exhibit
Number         Description of Exhibit

10.1        1997 Annual Incentive Plan of Erie Indemnity Company

10.2        Erie Indemnity Company Long-Term Incentive Plan

10.3        Employment Agreement dated December 16, 1997 by and between
            Erie Indemnity Company and Stephen A. Milne

10.4        Employment Agreement dated December 16, 1997 by and between
            Erie Indemnity Company and Jan R. Van Gorder

10.5        Employment Agreement dated December 16, 1997 by and between
            Erie Indemnity Company and Philip A. Garcia

10.6        Employment Agreement dated December 16, 1997 by and between
            Erie Indemnity Company and John J. Brinling, Jr.

13          1997 Annual Report to Security Holders.  Reference is made to
            the Annual Report furnished to the Commission, herewith.

27          Financial Data Schedule


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

(b)       No reports on Form 8-K have been  filed or were  required  to be filed
          during the last quarter of the period covered by this report.

                                       23
<PAGE>


                                  SIGNATURES

Pursuant to the requirements of Section 15(d) of the Securities  Exchange Act of
1934,  the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Date:  March 11, 1998    ERIE FAMILY LIFE INSURANCE COMPANY
                                  (Registrant)


                                  Principal Officers

                                /s/ Stephan A. Milne
                   Stephen A. Milne, President and C.E.O.


                                /s/ Jan R. Van Gorder
    Jan R. Van Gorder, Executive Vice President, Secretary & General Counsel


                                  /s/ Philip A. Garcia
                 Philip A. Garcia, Executive Vice President & CFO


                                  /s/ Timothy G. NeCastro
               Timothy G. NeCastro, Senior Vice President & Controller


                              Board of Directors


/s/ Peter B. Bartlett                              /s/ Irvin H. Kochel
  Peter B. Bartlett                                Dr. Irvin H. Kochel

/s/ Samuel P. Black, III                            /s/ Edmund J. Mehl
  Samuel P. Black, III                                 Edmund J. Mehl

/s/ J. Ralph Borneman                              /s/ Stephen A. Milne
  J. Ralph Borneman                                   Stephen A. Milne

/s/ Patricia A. Goldman                             /s/ John M. Petersen
  Patricia A. Goldman                                  John M. Petersen

/s/ Susan Hirt Hagen                                /s/ Seth E. Schofield
  Susan Hirt Hagen                                     Seth E. Schofield

/s/ Thomas B. Hagen                                 /s/ Jan R. Van Gorder
  Thomas B. Hagen                                      Jan R. Van Gorder

/s/  F. William Hirt                                /s/ Harry H. Weil
   F. William Hirt                                     Harry H. Weil

                                       24
<PAGE>


                                           INDEPENDENT AUDITORS' REPORT


To The Board of Directors and Shareholders
Erie Family Life Insurance Company

We have  audited  the  statements  of  financial  position  of Erie  Family Life
Insurance  Company  (Company)  as of December  31, 1997 and 1996 and the related
statements of  operations,  shareholders'  equity and cash flows for each of the
three years in the period  ended  December  31,  1997,  as contained in the 1997
annual report,  incorporated  by reference in the annual report on Form 10-K for
the year ended December 31, 1997. In connection with our audits of the financial
statements, we also have audited the financial statement schedules, as listed in
the  accompanying  index.  These  financial  statements and financial  statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial  statements and financial  statement
schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Erie Family Life  Insurance
Company as of December 31, 1997 and 1996,  and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 1997
in  conformity  with  generally  accepted  accounting  principles.  Also  in our
opinion, the related financial statement schedules,  when considered in relation
to the basic  financial  statements  taken as a whole,  present  fairly,  in all
material respects, the information set forth therein.



/s/ Brown Schwab Bergquist & Co.





Erie, Pennsylvania
February 17, 1998

                                       25
<PAGE>



SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES
<TABLE>
<CAPTION>


                                                            December 31, 1997

                                                                   Cost or                                      Amount at which
                                                                  Amortized                 Market                Shown in the
Type of Investment                                                  Cost                    Value                Balance Sheet
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                      <C>                     <C>

Fixed Maturities Available-for-sale

U. S. Treasuries                                         $              4,267,607 $             4,810,992 $              4,810,992
U. S. Government Agency                                                27,519,035              27,945,095               27,945,095
States & Political Subdivisions                                         2,058,330               2,213,302                2,213,302
Special Revenue                                                        14,209,832              15,315,426               15,315,426
Public Utilities                                                       80,490,970              82,745,511               82,745,511
U. S. Banks, Trusts, and Insurance Companies                           99,820,214             105,584,765              105,584,765
U. S. Industrial and Miscellaneous                                    285,565,364             297,590,104              297,590,104
Foreign Governments - Agency                                            2,987,776               2,347,500                2,347,500
Foreign Banks, Trusts, and Insurance Companies                          5,000,000               5,099,000                5,099,000
Foreign Industrial and Miscellaneous                                   13,873,515              14,525,792               14,525,792
-----------------------------------------------------------------------------------------------------------------------------------
      Total Fixed Maturities available-for-sale          $            535,792,643 $           558,177,487 $            558,177,487
-----------------------------------------------------------------------------------------------------------------------------------

Equity Securities

Common Stock
U. S. Banks, Trusts and Insurance Companies              $                730,500 $               939,375 $                939,375
U. S. Industrial and Miscellaneous                                     27,648,458              27,400,370               27,400,370

Non-Redeemable Preferred Stocks:
Public Utilities                                                        4,000,000               4,050,080                4,050,080
U. S. Banks, Trusts and Insurance Companies                            55,302,065              62,183,928               62,183,928
U. S. Industrial and Miscellaneous                                     12,440,871              14,240,640               14,240,640
Foreign Banks, Trusts, and Insurance Companies                          7,765,000               7,967,500                7,967,500
Foreign Industrial and Miscellaneous                                    3,900,000               4,060,000                4,060,000
-----------------------------------------------------------------------------------------------------------------------------------
Total Equity Securities                                  $            111,786,894 $           120,841,893 $            120,841,893
-----------------------------------------------------------------------------------------------------------------------------------
Real Estate
   Investment Property                                   $              1,624,306 $             1,624,306 $              1,624,306
Policy Loans                                                            5,099,671               5,099,671                5,099,671
Mortgage Loans                                                         10,049,733              10,049,733               10,049,733
Other Invested Assets                                                   7,240,282               7,240,282                7,240,282
-----------------------------------------------------------------------------------------------------------------------------------
Total Investments                                        $            671,593,529 $           703,033,372 $            703,033,372
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       26
<PAGE>




SCHEDULE V - SUPPLEMENTARY INSURANCE INFORMATION
<TABLE>
<CAPTION>


                                                                  At December 31,
                                 ------------------------------------------------------------------------------------
                                       Deferred               Future
                                        Policy                Policy                                   Other
                                      Acquisition           Benefits &           Unearned             Policy
Segment                                  Costs               Deposits            Premium              Claims
---------------------------------------------------------------------------------------------------------------------
<S>                           <C>                          <C>                    <C>                 <C>

1997
Ordinary Life Insurance       $        55,958,508          127,064,469            131,926             1,839,677
Group Life Insurance                            0            1,189,498                  0               210,000
Annuities                               8,608,577          489,444,701                  0                     0
Supplemental Contracts                          0              876,054                  0                     0
---------------------------------------------------------------------------------------------------------------------
     Total                    $        64,567,085          618,574,722            131,926             2,049,677
---------------------------------------------------------------------------------------------------------------------

1996
Ordinary Life Insurance       $        50,586,096          107,704,284            119,145             1,612,105
Group Life Insurance                            0            1,135,755                  0                91,000
Annuities                               7,440,332          450,570,003                  0                     0
Supplemental Contracts                          0              889,669                  0                     0
---------------------------------------------------------------------------------------------------------------------
     Total                    $        58,026,428          560,299,711            119,145             1,703,105
---------------------------------------------------------------------------------------------------------------------

1995
Ordinary Life Insurance       $        43,893,056           93,756,432            104,951               823,618
Group Life Insurance                            0              984,149                  0                73,408
Annuities                               6,869,236          405,346,808                  0                     0
Supplemental Contracts                          0              872,745                  0                     0
---------------------------------------------------------------------------------------------------------------------
     Total                    $        50,762,292          500,960,134            104,951               897,026
---------------------------------------------------------------------------------------------------------------------

</TABLE>


                                       27
<PAGE>


SCHEDULE V - SUPPLEMENTARY INSURANCE INFORMATION (CONTINUED)
<TABLE>
<CAPTION>


                                                       For the Years Ended December 31,
                                 -------------------------------------------------------------------------------------------------
                                                                                                Amortization
                                                            Net                Life &            of Deferred               Other
                                     Policy              Investment           Annuity            Acquisition             Operating
Segment                           Revenues (a)             Income             Benefits              Costs                Expenses
----------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                        <C>                <C>                    <C>                 <C>

1997
Ordinary Life Insurance       $     32,826,827           14,659,150         18,511,338             3,607,634            7,911,668
Group Life Insurance                 2,363,002               82,350          1,367,179                     0              590,861
Annuities                                3,643           35,110,681         27,614,299                87,332            1,088,065
Supplemental Contracts                       0               62,111             51,604                     0                4,163
----------------------------------------------------------------------------------------------------------------------------------
     Total                    $     35,193,472           49,914,292         47,544,420             3,694,966            9,594,757
----------------------------------------------------------------------------------------------------------------------------------

1996
Ordinary Life Insurance       $     29,038,797           13,165,970         17,434,872             2,456,879            7,078,531
Group Life Insurance                 2,073,494               75,877          1,040,741                     0              483,232
Annuities                                3,871           32,641,980         25,061,905               684,471            1,785,210
Supplemental Contracts                       0               65,142             47,430                     0                4,280
----------------------------------------------------------------------------------------------------------------------------------
     Total                    $     31,116,162           45,948,969         43,584,948             3,141,350            9,351,253
----------------------------------------------------------------------------------------------------------------------------------

1995
Ordinary Life Insurance       $     25,764,413           11,329,270         14,372,964             1,813,419            7,541,883
Group Life Insurance                 1,854,910               59,239          1,035,599                     0              360,556
Annuities                              454,674           29,509,614         22,664,856               544,708            2,281,533
Supplemental Contracts                       0               64,689             53,930                     0                4,101
----------------------------------------------------------------------------------------------------------------------------------
     Total                    $     28,073,997           40,962,812         38,127,349             2,358,127           10,188,073
----------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Net of reinsurance ceded
</FN>
</TABLE>


                                                                  
<PAGE>
                                                                   


                                                SCHEDULE VI - REINSURANCE
<TABLE>
<CAPTION>
                                                                                                                         Percentage
                                                                     Ceded to           Assumed                           of Amount
                                                  Gross               Other           From Other             Net           Assumed
                                                  Amount             Companies          Companies            Amount         to Net
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                   <C>                  <C>              <C>                   <C>

December 31, 1997
Life Insurance in force                     $ 11,888,559,000      1,167,467,000        33,049,000       10,754,141,000        0.31%
Premiums for the year
  Life Insurance                                  36,587,421          3,760,594                 0           32,826,827        -0-
  Group                                            2,257,474                  0           109,171            2,366,645        4.61%
-----------------------------------------------------------------------------------------------------------------------------------
     Total Premiums                         $     38,844,895          3,760,594           109,171           35,193,472        0.31%
-----------------------------------------------------------------------------------------------------------------------------------

December 31, 1996
Life Insurance in force                     $ 10,766,917,000      1,151,610,000        31,655,000        9,646,962,000        0.33%
Premiums for the year
  Life Insurance                                  32,673,673          3,634,876                 0           29,038,797        -0-
  Group                                            1,994,659                  0            82,706            2,077,365        3.98%
-----------------------------------------------------------------------------------------------------------------------------------
     Total Premiums                         $     34,668,332          3,634,876            82,706           31,116,162        0.27%
-----------------------------------------------------------------------------------------------------------------------------------

December 31, 1995
Life Insurance in force                     $  9,537,687,000      1,197,855,000        31,108,000        8,370,940,000        0.37%
Premiums for the year
  Life Insurance                                  29,118,897          3,354,484                 0           25,764,413        -0-
  Group                                            2,205,144                  0           104,440            2,309,584        4.52%
-----------------------------------------------------------------------------------------------------------------------------------
     Total Premiums                         $     31,324,041          3,354,484           104,440           28,073,997        0.37%
-----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                       28



<PAGE>

                                     EXHIBIT INDEX

                      (Pursuant to Item 601 of Regulation S-K)

                                                                  Sequentially
Exhibit                                                              Numbered
Number                 Description of Exhibit                          Page

10.1    1997 Annual Incentive Plan of Erie Indemnity Company            30

10.2    Erie Indemnity Company Long-Term Incentive Plan                 35

10.3    Employment Agreement dated December 16, 1997 by and
          between Erie Indemnity Company and Stephen A. Milne           45

10.4    Employment Agreement dated December 16, 1997 by and
          between Erie Indemnity Company and Jan R. Van Gorder          62

10.5    Employment Agreement dated December 16, 1997 by and
          between Erie Indemnity Company and Philip A. Garcia           79

10.6    Employment Agreement dated December 16, 1997 by and
          between Erie Indemnity Company and John J. Brinling, Jr.      96

13      1997 Annual Report to Security Holders.  Reference is made
          to the Annual Report furnished to the Commission, herewith.  113

27      Financial Data Schedule                                        148

                                       29
<PAGE>