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PROSPECTUS SUPPLEMENT
First Allmerica Financial Insurance Company
Allmerica Financial Life Insurance and Annuity Company
ALLMERICA SELECT SEPARATE ACCOUNT
Supplement to Prospectus Dated May 1, 1999
In July, 1997, a lawsuit on behalf of a putative class was instituted in
Louisiana against First Allmerica Financial Life Insurance Company ("First
Allmerica") and Allmerica Financial Life Insurance and Annuity Company
("Allmerica Financial") and certain of their affiliates alleging fraud, unfair
or deceptive acts, breach of contract, misrepresentations, and related claims in
the sale of life insurance policies. First Allmerica and Allmerica Financial
deny all allegations of wrongdoing. In October, 1997, the plaintiffs voluntarily
dismissed the Louisiana suit and filed a substantially similar action in Federal
District Court in Worcester, Massachusetts; SEE BUSSIE, ET AL. VS ALLMERICA
FINANCIAL CORPORATION, ET.AL., Civil Action No. 97-40204. In early November
1998, the parties entered into a settlement agreement ("Settlement"), for which
the Court granted preliminary approval on December 4, 1998. A Fairness Hearing
was held on March 19, 1999, and on May 19, 1999 the Court issued an order
certifying members of the class ("Class Members") for settlement purposes and
granting final approval of the Settlement.
Class Members under the litigation include certain persons and entities who at
any time from January 1, 1978 up through and including May 31, 1998 (the "Class
Period") have or had an ownership interest in certain whole life, universal
life, or variable universal life insurance policies issued by First Allmerica,
Allmerica Financial, or their affiliates. As used herein, "Policy" refers to a
life insurance policy issued by First Allmerica, Allmerica Financial, or their
affiliates and owned by a Class Member during the Class Period.
Under the Settlement, Class Members may choose been (1) General Policy Relief or
(2) the Alternative Dispute Resolution ("ADR") Process, as described in the
Notice sent to all Class Members by the Court beginning on July 31, 1999.
General Policy Relief includes the opportunity for the Class Member or for
certain affiliated persons ("Affinity Group") of the Class Member to purchase
(1) a discounted life insurance product or (2) an annuity enhanced with
contributions by First Allmerica or Allmerica Financial, including the variable
annuity contract described in the attached prospectus.
If a variable annuity contract described in the attached prospectus is issued in
connection with General Policy Relief, the contract (the "Enhanced Annuity
Contract") will be issued subject to the following additional provisions:
- - The initial deposit ("Deposit Eligible for Enhancement") in an Enhanced
Annuity Contract must equal at least $5,000, and will qualify for an
enhancement and surrender charge waiver according to the following
schedule:
<TABLE>
<CAPTION>
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Maximum Initial Deposit
Class Member's Eligible for Enhancement and
Policy Face Amount Surrender Charge Waivers
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<S> <C>
Less than $100,000 $15,000
From $100,000 to $249,000 $30,000
From $250,000 to $999,999 $40,000
$1 million or over $50,000
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</TABLE>
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- - On each contract anniversary, a bonus of 0.50% of the Deposit Eligible for
Enhancement (or the Contract Value, if less) shall be credited to the
Enhanced Annuity Contract, provided that the contract is still in force.
- - Any applicable surrender charges for the amount of the Deposit Eligible
for Enhancement shall be waived on an Enhanced Annuity Contract owned by
one natural person on and after the later of
(i) the date when the Contract Owner is at least 59 years of age; or
(ii) the date the Enhanced Annuity Contract has been in force for at
least five years.
- - To obtain an Enhanced Annuity Contract:
(i) the purchaser must make the deposit with funds from a source other
than a surrender of, a policy loan against, or a withdrawal of the
values from, any existing insurance or annuity product issued by
First Allmerica or Allmerica Financial;
(ii) the purchaser who is the owner of the Enhanced Annuity Contract must
be under age 80 at the date of issue (unless the purchaser is not a
natural person, in which case the annuitant must be under age 80);
(iii) no funds derived from a tax-qualified plan or product will be
accepted as payment for an Enhanced Annuity Contract; and
(iv) the Enhanced Annuity Contract will not be issued on a tax-qualified
basis.
Supplement dated August 10, 1999
Select Resource Annuity
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