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EXHIBIT 10.46

INSURANCE BONUS AGREEMENT

Erie Indemnity Company, a Pennsylvania business corporation (the Employer),
and Michael J. Krahe (the Executive) intending to be legally bound hereby
agree as follows:



| | 1. |  | The Employer agrees to pay all premiums on life insurance Policy
No.
16 352 040 insuring Executives life issued by the Northwestern Mutual
Life Insurance Company of Milwaukee, Wisconsin, and owned by Executive
as long as Executive remains employed by the Employer. No
contributions toward the payment of premiums by the Executive are
required.                                                                                                                            
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | The Executive will execute an endorsement on the policy restricting
the Executives right to (a) surrender the policy for its cash value,
(b) obtain a policy loan from the insurance company, (c) assign the
policy as collateral, (d) change the ownership of the policy by
endorsement or assignment, or (e) change insured. The Employer shall
not be entitled to receive any benefits under the policy.                                                                        
|
| |    |  | Employer shall release the endorsement after fifteen (15) years have
passed if Executive was continuously employed by the Employer
throughout that time. If Executives employment is terminated for any
reason by either party
during that fifteen (15) year period, the Employer is under no
obligation to release the endorsement. However, if employment is
terminated prior to that time, the Executive retains the right to
convert the policy to a plan of paid up insurance.
|
| | 3. |  | The Executive will recognize the premium paid hereunder as
additional compensation for federal income tax purposes.                                                                                                                                                                                                                                                                                                                                                                 
|
| | 4. |  | The Employer shall, in addition to the premium payment, annually
increase the Executives normal compensation by an amount determined by
the following formula: P/1-X where P equals premium paid by the
Employer on the policy pursuant to this Agreement and X equals the
Executives marginal Federal income tax bracket for such year plus the
tax rate for any of the following that may be applicable:                                                                        

| |  |     |  |                                                   
| |  | --- |  | --------------------------------------------------
| |  | (a) |  | Pennsylvania income tax;                          
| |  |     |  |                                                   
| |  | (b) |  | Employee portion of Pennsylvania
unemployment tax;
| |  |     |  |                                                   
| |  | (c) |  | Local income tax;                                 
| |  |     |  |                                                   
| |  | (d) |  | Employee portion of FICA OASDI; and               
| |  |     |  |                                                   
| |  | (e) |  | Employee portion of FICA Medicare.                



| | 5. |  | This Agreement is being delivered and is intended to be performed
in Pennsylvania and shall be construed and enforced in accordance with
the laws of Pennsylvania.
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | 6. |  | This Agreement is the entire understanding among the parties and
may be altered, amended or revoked only by subsequent written
instrument executed by all parties.
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

WITNESS WHEREOF the parties have executed this Agreement this 23rd day of
December, 2003.

|                 |  |         |  |                                          
|---------------- |  | ------- |  | -----------------------------------------
|                 |  | By:     |  | /s/ Douglas F. Ziegler                   
|                 |  |         |  |                                          
|(Corporate Seal) |  |         |  | Douglas F. Ziegler, Senior Vice President
|                 |  |         |  |                                          
|                 |  | Attest: |  | /s/ Jan R. Van Gorder                    
|                 |  |         |  |                                          
|                 |  |         |  | Jan R. Van Gorder, Secretary             
|                 |  |         |  |                                          
|                 |  |         |  | /s/ Michael J. Krahe                     
|                 |  |         |  |                                          
|                 |  |         |  | Michael J. Krahe                         

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