A.M. Best Affirms Ratings of Erie Insurance Group, Erie Family Life Insurance Company and Erie Indemnity Company

A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-” of Erie Insurance Group (Erie) and its property/casualty affiliates. Concurrently, A.M. Best has affirmed the ICR of "a+” of Erie Indemnity Company (Erie Indemnity) (NASDAQ: ERIE), Erie’s publicly-traded management company. Additionally, A.M. Best has affirmed the FSR of A (Excellent) and ICR of "a” of Erie’s life affiliate, Erie Family Life Insurance Company (Erie Family Life). All companies are domiciled in Erie, PA. The outlook for all ratings is stable. (See below for a detailed list of the companies and ratings.) The rating affirmations reflect Erie’s superior risk-adjusted capitalization, solid operating performance and well-established regional market presence. Erie maintains a competitive advantage through its excellent level of service combined with its agency partnering approach, which helps to strengthen agency loyalty. Despite the soft pricing environment, robust surplus growth in recent years has been attributed to disciplined underwriting, increased pricing sophistication and technology advancements. Additional factors, which have contributed to the group’s strong earnings, include solid investment income and its low operating cost structure. Offsetting rating factors include Erie’s geographic business concentration, which subjects its earnings to natural and man-made catastrophe losses. Also, increased competition and margin compression driven by continued premium declines could dampen operating profitability in 2008. The ICR affirmation of Erie Indemnity recognizes its strong financial position derived from management fee revenue. This strength is partially offset by Erie Indemnity’s dependence on management fee revenue and concentrated credit risk related to unsecured receivables due from Erie Insurance Exchange for certain fees, costs and reimbursements. Erie Indemnity serves as attorney-in-fact for the insurance operations with nearly $1.0 billion in shareholders’ equity and no long-term debt obligations as of March 2008. The affirmation of Erie Family Life’s ratings acknowledges its integral position within Erie and its past demonstrated financial commitment to Erie Family Life, consistent positive statutory operating results and its more than adequate level of risk-adjusted capitalization based on Best’s Capital Adequacy Ratio. Partially offsetting these positive rating factors are Erie Family Life’s large exposure to interest-sensitive fixed annuities and a declining trend in its first year ordinary life business. The FSR of A+ (Superior) and ICRs of "aa-” have been affirmed for Erie Insurance Group and its following property/casualty affiliates: Erie Insurance Exchange Erie Insurance Company Erie Insurance Company of New York Erie Insurance Property & Casualty Company Flagship City Insurance Company The ICR "a+” has been affirmed for Erie Indemnity Company. The FSR of A (Excellent) and ICR of "a” have been affirmed for Erie Family Life Insurance Company. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.