ALLMERICA SELECT SEP ACCT OF 1ST ALLMERICA FIN LIFE INS CO, 485BPOS, 2000-04-28

ALLMERICA SELECT SEP ACCT OF 1ST ALLMERICA FIN LIFE INS CO
485BPOS, 2000-04-28

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<PAGE>

File Nos. 333-63087
811-8116

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 2

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20

ALLMERICA SELECT SEPARATE ACCOUNT OF
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(Exact Name of Registrant)

FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
(Name of Depositor)
440 Lincoln Street
Worcester, MA 01653
(Address of Depositor's Principal Executive Offices)
(508) 855-1000
(Depositor's Telephone Number, including Area Code)

Mary Eldridge, Secretary
First Allmerica Financial Life Insurance Company
440 Lincoln Street
Worcester, MA 01653
(Name and Address of Agent for Service of Process)

It is proposed that this filing will become effective:

___ immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 2000 pursuant to paragraph (b) of Rule 485
---
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on (date) pursuant to paragraph (a)(1) of Rule 485
___ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment

VARIABLE ANNUITY CONTRACTS

Pursuant to Reg. Section 270.24f-2 of the Investment Company Act of 1940 ("1940
Act"), Registrant hereby declares that an indefinite amount of its securities is
being registered under the Securities Act of 1933 ("1933 Act"). The Rule 24f-2
Notice for the issuer's fiscal year ended December 31, 1999 was filed on or
before March 30, 2000.
<PAGE>

CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF
ITEMS CALLED FOR BY FORM N-4

FORM N-4 ITEM NO. CAPTION IN PROSPECTUS

1.....................Cover Page

2.....................Special Terms

3.....................Summary of Fees and Expenses; Summary of Contract Features

4.....................Condensed Financial Information; Performance Information

5.....................Description of the Companies, the Variable Accounts,
the Trust, Fidelity VIP and T. Rowe Price

6.....................Charges and Deductions

7.....................Description of the Contract

8.....................Electing the Form of Annuity and the Annuity Date;
Description of Variable Annuity Payout Options; Annuity
Benefit Payments

9.....................Death Benefit

10....................Payments; Computation of Values; Distribution

11....................Surrender; Withdrawals; Texas Optional Retirement Program

12....................Federal Tax Considerations

13....................Legal Matters

14....................Statement of Additional Information-Table of Contents

FORM N-4 ITEM NO. CAPTION IN STATEMENT OF ADDITIONAL INFORMATION

15....................Cover Page

16....................Table of Contents

17....................General Information and History

18....................Services

19....................Underwriters

20....................Underwriters

21....................Performance Information

<PAGE>

22....................Annuity Benefit Payments

23....................Financial Statements
<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT
(ALLMERICA SELECT CHARTER)

ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

SUPPLEMENT TO PROSPECTUS DATED MAY 1, 2000

* * *

An Application for an Order of Exemption has been filed with the Securities and
Exchange Commission on behalf of Allmerica Financial Life Insurance and Annuity
Company, First Allmerica Financial Life Insurance Company, Allmerica Select
Separate Account, and Allmerica Investments, Inc. (collectively referred to
herein as the "Applicants"), to permit the Applicants to deduct a charge for an
optional benefit rider in the manner set out in "WHAT CHARGES WILL I INCUR UNDER
MY CONTRACT?" under the SUMMARY OF CONTRACT FEATURES, "Optional Enhanced Death
Benefit Rider" under DESCRIPTION OF THE CONTRACT, "G. Death Benefit," and "C.
Optional Benefit Rider Charges" under the CHARGES AND DEDUCTIONS sections of the
prospectus. The language contained in the prospectus describing the charge for
the optional benefit rider will apply once the Application for an Order of
Exemption has been granted.

While the Application for an Order of Exemption is pending, the first sentence
of the fourth paragraph of "WHAT CHARGES WILL I INCUR UNDER MY CONTRACT" is
hereby replaced by the following:

Subject to state availability, optional benefit riders are available for an
additional charge equal to an annual rate of 0.25% for Minimum Guaranteed
Annuity Payout Rider with a ten-year waiting period, 0.15% for a Minimum
Guaranteed Annuity Payout Rider with a fifteen-year waiting period and 0.25% for
an Enhanced Death Benefit Rider, which is deducted on the last day of each
month.

* * *

The second sentence of the last paragraph of "Optional Enhanced Death Benefit
Rider" is hereby replaced by the following:

On the last day of each month, a charge equal to 1/12th of the annual rate is
made against the Accumulated Value of the Contract at that time.

* * *
<PAGE>

The first two paragraphs of "C. Optional Benefit Rider Charges" are hereby
replaced by the following:

Subject to state availability, the Company offers an optional Minimum Guaranteed
Annuity Payout Rider that may be elected by the Owner. A separate monthly charge
is made for the Rider. On the last day of each month a charge equal to 1/12th of
the applicable annual rate (see table below) is made against the Accumulated
Value of the Contract at that time. The charge is made through a pro-rata
reduction of the Accumulated Value of the Sub-Accounts, the Fixed Account and
the Guarantee Period Accounts (based on the relative value that the Accumulation
Units of the Sub-Accounts, the dollar amounts in the Fixed Account and the
dollar amounts in the Guarantee Period Accounts bear to the total Accumulated
Value).

The applicable charge is assessed on the Accumulated Value on the last day of
each month, multiplied by 1/12th of the following annual percentage rates:

* * *

SUPPLEMENT DATED MAY 1, 2000

<PAGE>
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
WORCESTER, MASSACHUSETTS
ALLMERICA SELECT SEPARATE ACCOUNT

This Prospectus provides important information about the Allmerica Select
Charter variable annuity contracts issued by Allmerica Financial Life Insurance
and Annuity Company (in all jurisdictions except Hawaii and New York) and First
Allmerica Financial Life Insurance Company in New York and Hawaii. The contract
is a flexible payment tax-deferred combination variable and fixed annuity
offered on both a group and individual basis. PLEASE READ THIS PROSPECTUS
CAREFULLY BEFORE INVESTING AND KEEP IT FOR FUTURE REFERENCE. ANNUITIES INVOLVING
RISKS INCLUDING POSSIBLE LOSS OF PRINCIPAL.

A Statement of Additional Information dated May 1, 2000 containing more
information about this annuity is on file with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus. A copy may be
obtained free of charge by calling Allmerica Select Customer Service at
1-800-366-1492. The Table of Contents of the Statement of Additional Information
is listed on page 3 of this Prospectus. This Prospectus and Statement
of Additional Information can also be obtained from the Securities and Exchange
Commission's website (http://www.sec.gov).

The Variable Account, known as the Allmerica Select Separate Account is
subdivided into Sub-Accounts. Each Sub-Account offered as an investment option
under this contract invests exclusively in shares of one of the following funds:

<TABLE>
<CAPTION>
FUND INVESTMENT ADVISER
- ---- ------------------
<S> <C>
Select Emerging Markets Fund Schroder Investment Management North America Inc.
Select International Equity Fund Bank of Ireland Asset Management (U.S.) Limited
T. Rowe Price International Stock Portfolio Rowe Price-Fleming International, Inc.
Select Aggressive Growth Fund Nicholas-Applegate Capital Management, L.P.
Select Capital Appreciation Fund T. Rowe Price Associates, Inc.
Select Value Opportunity Fund Cramer Rosenthal McGlynn, LLC
Select Growth Fund Putnam Investment Management, Inc.
Select Strategic Growth Fund TCW Investment Management Company
Fidelity VIP Growth Fund Fidelity Management & Research Company
Select Growth and Income Fund J.P. Morgan Investment Management Inc.
Fidelity VIP Equity-Income Portfolio Fidelity Management & Research Company
Fidelity VIP High Income Portfolio Fidelity Management & Research Company
Select Income Fund* Standish, Ayer & Wood, Inc.
Money Market Fund Allmerica Asset Management, Inc.
</TABLE>

*On or about July 1, 2000, subject to regulatory approval, shares of the Select
Investment Grade Income Fund will be substituted for shares of the Select Income
Fund. As of the substitution date, shares of the Select Investment Grade Income
Fund will be available and shares of the Select Income Fund will no longer be
offered.

The Fixed Account, which is part of the Company's General Account, is an
investment option that pays an interest rate guaranteed for one year from the
time a payment is received. Another investment option, the Guarantee Period
Accounts, offers fixed rates of interest for specified periods ranging from 3 to
10 years. A Market Value Adjustment is applied to payments removed from a
Guarantee Period Account before the end of the specified period. The Market
Value Adjustment may be positive or negative. Payments allocated to a Guarantee
Period Account are held in the Company's Separate Account GPA (except in
California where they are allocated to the General Account).

THIS ANNUITY IS NOT A BANK DEPOSIT OR OBLIGATION; FEDERALLY INSURED; OR ENDORSED
BY ANY BANK OR GOVERNMENTAL AGENCY.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED THAT THE INFORMATION IN THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

DATED MAY 1, 2000
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
SPECIAL TERMS............................................... 4
SUMMARY OF FEES AND EXPENSES................................ 6
SUMMARY OF CONTRACT FEATURES................................ 10
DESCRIPTION OF THE COMPANIES, THE VARIABLE ACCOUNTS, THE
TRUST, FIDELITY VIP AND T. ROWE PRICE...................... 17
INVESTMENT OBJECTIVES AND POLICIES.......................... 19
PERFORMANCE INFORMATION..................................... 21
DESCRIPTION OF THE CONTRACT................................. 23
A. Payments............................................. 23
B. Right to Cancel Individual Retirement Annuity........ 24
C. Right to Cancel All Other Contracts.................. 24
D. Transfer Privilege................................... 24
Asset Allocation Model Reallocations................ 25
Automatic Transfers and Automatic Account
Rebalancing Options................................. 26
E. Surrender............................................ 26
F. Withdrawals.......................................... 27
Systematic Withdrawals.............................. 27
Life Expectancy Distributions....................... 28
G. Death Benefit........................................ 28
Death of An Owner Prior to the Annuity Date......... 28
Optional Enhanced Death Benefit Rider............... 29
Payment of the Death Benefit........................ 29
H. The Spouse of the Owner as Beneficiary............... 30
I. Assignment........................................... 30
J. Electing the Form of Annuity and the Annuity Date.... 30
K. Description of Variable Annuity Payout Options....... 31
L. Annuity Benefit Payments............................. 32
Determination of the First Variable Annuity Benefit
Payment............................................. 32
The Annuity Unit.................................... 33
Determination of the Number of Annuity Units........ 33
Dollar Amount of Subsequent Variable Annuity Benefit
Payments............................................ 33
M. Optional Minimum Guaranteed Annuity Payout (M-GAP)
Rider................................................... 34
N. NORRIS Decision...................................... 36
O. Computation of Values................................ 36
The Accumulation Unit............................... 36
Net Investment Factor............................... 36
CHARGES AND DEDUCTIONS...................................... 37
A. Variable Account Deductions.......................... 37
Mortality and Expense Risk Charge................... 37
Administrative Expense Charge....................... 37
Other Charges....................................... 37
B. Contract Fee......................................... 38
C. Optional Benefit Rider Charges....................... 38
D. Premium Taxes........................................ 38
E. Transfer Charge...................................... 39
GUARANTEE PERIOD ACCOUNTS................................... 40
FEDERAL TAX CONSIDERATIONS.................................. 42
A. General.............................................. 42
The Company......................................... 42
Diversification Requirements........................ 42
Investor Control.................................... 42
</TABLE>

2
<PAGE>

<TABLE>
<S> <C>
B. Qualified and Non-Qualified Contracts................ 43
C. Taxation of the Contracts in General................. 43
Withdrawals Prior to Annuitization.................. 43
Annuity Payouts After Annuitization................. 43
Penalty on Distribution............................. 43
Assignments or Transfers............................ 44
Nonnatural Owners................................... 44
Deferred Compensation Plans of State and Local
Government and Tax-Exempt........................... 44
D. Tax Withholding...................................... 44
E. Provisions Applicable to Qualified Employer Plans.... 45
Corporate and Self-Employed Pension and Profit
Sharing Plans....................................... 45
Individual Retirement Annuities..................... 45
Tax-Sheltered Annuities............................. 45
Texas Optional Retirement Program................... 46
STATEMENTS AND REPORTS...................................... 46
LOANS (QUALIFIED CONTRACTS ONLY)............................ 46
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS........... 46
CHANGES TO COMPLY WITH LAW AND AMENDMENTS................... 47
VOTING RIGHTS............................................... 48
DISTRIBUTION................................................ 48
LEGAL MATTERS............................................... 48
FURTHER INFORMATION......................................... 48
APPENDIX A -- MORE INFORMATION ABOUT THE FIXED ACCOUNT...... A-1
APPENDIX B -- PERFORMANCE TABLES (ALLMERICA FINANCIAL LIFE
INSURANCE AND ANNUITY COMPANY)............................. B-1
APPENDIX C -- PERFORMANCE TABLES (FIRST ALLMERICA FINANCIAL
LIFE INSURANCE COMPANY).................................... C-1
APPENDIX D -- THE MARKET VALUE ADJUSTMENT................... D-1
APPENDIX E -- CONDENSED FINANCIAL INFORMATION............... E-1

STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY............................. 2
TAXATION OF THE CONTRACT, THE VARIABLE ACCOUNT AND THE
COMPANY.................................................... 3
SERVICES.................................................... 3
UNDERWRITERS................................................ 3
ANNUITY BENEFIT PAYMENTS.................................... 4
ENHANCED AUTOMATIC TRANSFER (DOLLAR COST AVERAGING)
PROGRAM.................................................... 5
PERFORMANCE INFORMATION..................................... 6
FINANCIAL STATEMENTS........................................ F-1
</TABLE>

3
<PAGE>
SPECIAL TERMS

ACCUMULATED VALUE: the total value of all Accumulation Units in the Sub-Accounts
plus the value of all accumulations in the Fixed Account and Guarantee Period
Accounts credited to the Contract on any date before the Annuity Date.

ACCUMULATION UNIT: a unit of measure used to calculate the value of a
Sub-Account before annuity benefit payments begin.

ANNUITANT: the person designated in the Contract whose life is used to determine
the duration of annuity benefit payments involving a life contingency. Joint
Annuitants are permitted and, unless otherwise indicated, any reference to
Annuitant shall include Joint Annuitants.

ANNUITY DATE: the date on which annuity benefit payments begin. This date may
not be later than the first day of the month before the Owner's 99th birthday.

ANNUITY UNIT: a unit of measure used to calculate the value of the periodic
annuity benefit payments under the Contract.

COMPANY: unless otherwise specified, any reference to the "Company" shall refer
exclusively to Allmerica Financial Life Insurance and Annuity Company for
contracts issued in all jurisdictions except Hawaii and New York and exclusively
to First Allmerica Financial Life Insurance Company for contracts issued in
Hawaii and New York.

FIXED ACCOUNT: an investment option under the Contract that guarantees principal
and a fixed minimum interest rate and which is part of the Company's General
Account.

FIXED ANNUITY PAYOUT: an annuity payout option providing for annuity benefit
payments which remain fixed in amount throughout the annuity benefit payment
period selected.

GENERAL ACCOUNT: all the assets of the Company other than those held in a
separate account.

GUARANTEE PERIOD: the number of years that a Guaranteed Interest Rate is
credited to a Guarantee Period Account.

GUARANTEE PERIOD ACCOUNT: an account which corresponds to a Guaranteed Interest
Rate for a specified Guarantee Period.

GUARANTEED INTEREST RATE: the annual effective rate of interest, after daily
compounding, credited to a Guarantee Period Account.

MARKET VALUE ADJUSTMENT: a positive or negative adjustment to earnings in the
Guarantee Period Account assessed if any portion of a Guarantee Period Account
is withdrawn or transferred prior to the end of its Guarantee Period.

OWNER (YOU): the person, persons or entity entitled to exercise the rights and
privileges under this Contract. Joint Owners are permitted if one of the two is
an Annuitant. Unless otherwise indicated, any reference to Owner shall include
Joint Owners.

SUB-ACCOUNT: a subdivision of the Variable Account investing exclusively in the
shares of a corresponding fund of Allmerica Investment Trust ("Trust"), a
corresponding portfolio of the Fidelity Variable Insurance Products Fund
("Fidelity VIP"), or the T. Rowe Price International Stock Portfolio of T. Rowe
Price International Series, Inc. ("T. Rowe Price").

4
<PAGE>

SURRENDER VALUE: the Accumulated Value of the Contract on full surrender after
application of any applicable Contract fee, rider charge and Market Value
Adjustment.

UNDERLYING FUNDS (FUNDS): an investment portfolio of the Trust, Fidelity VIP or
T. Rowe Price in which a Sub-Account invests.

VALUATION DATE: a day on which the net asset value of the shares of any of the
Underlying Funds is determined and unit values of the Sub-Accounts are
determined. Valuation Dates currently occur on each day on which the New York
Stock Exchange is open for trading, and on such other days (other than a day
during which no payment, withdrawal or surrender of a Contract was received)
when there is a sufficient degree of trading in an Underlying Fund's portfolio
securities such that the current unit value of the Sub-Accounts may be affected
materially.

VARIABLE ACCOUNT: Allmerica Select Separate Account, one of the Company's
separate accounts, consisting of assets segregated from other assets of the
Company. The investment performance of the assets of the Variable Account is
determined separately from the other assets of the Company and are not
chargeable with liabilities arising out of any other business which the Company
may conduct.

VARIABLE ANNUITY PAYOUT: an annuity payout option providing for payments varying
in amount in accordance with the investment experience of certain of the
Underlying Funds.

5
<PAGE>
SUMMARY OF FEES AND EXPENSES

There are certain fees and expenses that you will bear under the Allmerica
Select Charter Contract. The purpose of the following tables is to assist you in
understanding these fees and expenses. The tables show (1) charges under the
Contract, (2) annual expenses of the Sub-Accounts and (3) annual expenses of the
Funds. In addition to the charges and expenses described below, premium taxes
are applicable in some states and are deducted as described under "D. Premium
Taxes" in CHARGES AND DEDUCTIONS.

<TABLE>
<CAPTION>
CHARGE
(1) CONTRACT CHARGES: ------
<S> <C>
SALES CHARGE IMPOSED ON PAYMENTS: None
SURRENDER CHARGE: None

TRANSFER CHARGE: None
The Company currently makes no charge for processing
transfers and guarantees that the first 12 transfers in a
Contract year will not be subject to a transfer charge.
For each subsequent transfer, the Company reserves the
right to assess a charge, guaranteed never to exceed $25,
to reimburse the Company for the costs of processing the
transfer.

ANNUAL CONTRACT FEE: $35*
The fee is deducted annually and upon surrender prior to
the Annuity Date when Accumulated Value is less than
$75,000.

OPTIONAL RIDER CHARGES:
Under the following riders, 1/12th of the annual charge is
deducted pro-rata on a monthly basis at the end of each
month and, if applicable, at termination of the rider. The
charge on an annual basis as a percentage of the
Accumulated Value is:
Optional Minimum Guaranteed Annuity Payout (M-GAP) Rider 0.25%
with a ten-year waiting period:
Optional Minimum Guaranteed Annuity Payout (M-GAP) Rider 0.15%
with a fifteen year waiting period:
Optional Enhanced Death Benefit Rider: 0.25%

(2) ANNUAL SUB-ACCOUNT EXPENSES:
(on an annual basis as percentage of average daily net
assets)
Mortality and Expense Risk Charge: 1.25%
Administrative Expense Charge: 0.15%
------
Total Annual Expenses: 1.40%
</TABLE>

* This fee may vary by state. See your Contract for more information.

6
<PAGE>
(3) ANNUAL UNDERLYING FUND EXPENSES: Total expenses of the Underlying Funds are
not fixed or specified under the terms of the Contract and will vary from year
to year. The levels of fees and expenses also vary among the Underlying Funds.
The following table shows the expenses of the Underlying Funds as a percentage
of average net assets for the year ended December 31, 1999, as adjusted for any
material changes.

<TABLE>
<CAPTION>
MANAGEMENT FEE OTHER EXPENSES TOTAL FUND
(AFTER ANY (AFTER ANY EXPENSES (AFTER ANY
UNDERLYING FUND VOLUNTARY WAIVERS) REIMBURSEMENTS) WAIVERS/REIMBURSEMENTS)
- --------------- ------------------ --------------- -----------------------
<S> <C> <C> <C>
Select Emerging Markets Fund............. 1.35% 0.57% 1.92%(1)(2)
Select International Equity Fund......... 0.89% 0.13% 1.02%(1)(2)
T. Rowe Price International Stock
Portfolio............................... 1.05% 0.00% 1.05%
Select Aggressive Growth Fund............ 0.81%* 0.06% 0.87%(1)(2)*
Select Capital Appreciation Fund......... 0.90%* 0.07% 0.97%(1)*
Select Value Opportunity Fund............ 0.90% 0.07% 0.97%(1)(2)
Select Growth Fund....................... 0.78% 0.05% 0.83%(1)(2)
Select Strategic Growth Fund............. 0.85% 0.35% 1.20%(1)(2)
Fidelity VIP Growth Portfolio............ 0.58% 0.08% 0.66%(3)
Select Growth and Income Fund............ 0.67% 0.07% 0.74%(1)(2)
Fidelity VIP Equity-Income Portfolio..... 0.48% 0.09% 0.57%(3)
Fidelity VIP High Income Portfolio....... 0.58% 0.11% 0.69%
Select Income Fund....................... 0.52% 0.09% 0.61%(1)
Money Market Fund........................ 0.24% 0.05% 0.29%(1)
</TABLE>

*Effective September 1, 1999, the management fee rates for the Select Aggressive
Growth Fund and Select Capital Appreciation Fund were revised. The Management
Fee and Total Fund Expense ratios shown in the table above have been adjusted to
assume that the revised rates took effect January 1, 1999.

(1)Until further notice, Allmerica Financial Investment Management
Services, Inc. ("AFIMS") has declared a voluntary expense limitation of 1.50% of
average net assets for Select International Equity Fund, 1.35% for Select
Aggressive Growth Fund and Select Capital Appreciation Fund, 1.25% for Select
Value Opportunity Fund, 1.20% for Select Growth Fund, 1.10% for Select Growth
and Income Fund, 1.00% for Select Income Fund and 0.60% for Money Market Fund.
The total operating expenses of these Funds of the Trust were less than their
respective expense limitations throughout 1999.

Until further notice, AFIMS has declared a voluntary expense limitation of 1.20%
of average daily net assets for the Select Strategic Growth Fund. In addition,
AFIMS has agreed to voluntarily waive its management fee to the extent that
expenses of the Select Emerging Markets Fund exceed 2.00% of the Fund's average
daily net assets, except that such waiver shall not exceed the net amount of
management fees earned by AFIMS from the Fund after subtracting fees paid by
AFIMS to a sub-advisor.

Until further notice, the Select Value Opportunity Fund's management fee rate
has been voluntarily limited to an annual rate of 0.90% of average daily net
assets, and total expenses are limited to 1.25% of average daily net assets.

The declaration of a voluntary management fee or expense limitation in any year
does not bind AFIMS to declare future expense limitations with respect to these
Funds. These limitations may be terminated at any time.

(2)These Funds have entered into agreements with brokers whereby the brokers
rebate a portion of commissions. These amounts have been treated as reductions
of expenses. Including these reductions to the operating expenses, total annual
fund operating expenses were 1.88% for Select Emerging Markets Fund, 1.01% for
Select International Equity Fund, 0.84% for Select Aggressive Growth Fund, 0.88%
for Select Value Opportunity Fund, 0.81% for Select Growth Fund, 1.17% for
Select Strategic Growth Fund, and 0.73% for Select Growth and Income Fund.

7
<PAGE>
(3)A portion of the brokerage commissions that certain funds paid was used to
reduce fund expenses. In addition, through arrangements with certain funds', or
Fidelity Management & Research Company on behalf of certain funds', custodian
credits realized as a result of uninvested cash balances were used to reduce a
portion of the fund's expenses. Including these reductions, total operating
expenses presented in the table would have been 0.65% for the Fidelity VIP
Growth Portfolio and 0.56% for the Fidelity VIP Equity-Income Portfolio.

The Underlying Fund information above was provided by the Underlying Funds and
was not independently verified by the Company.

EXPENSE EXAMPLES: The following examples demonstrate the cumulative expenses
which an Owner would pay at 1-year, 3-year, 5-year and 10-year intervals under
certain contingencies. Each example assumes a $1,000 investment in a Sub-Account
and a 5% annual return on assets and assumes that the Underlying Fund expenses
listed above remain the same in each of the 1 ,3, 5, and 10-year intervals. As
required by rules of the Securities and Exchange Commission ("SEC"), the
Contract fee is reflected in the examples by a method designated to show the
average impact on an investment in the Variable Account. The total Contract fees
collected are divided by the total average net assets attributable to the
Contracts. The resulting percentage is 0.04%, and the amount of the Contract fee
is assumed to be $0.40 in the examples. The Contract fee is not deducted after
annuitization.

THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

(1) At the end of the applicable time period, you would pay the following
expenses on a $1,000 investment, assuming a 5% annual return on assets and no
optional benefit riders:(1)

<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Select Emerging Markets Fund............................... $34 $103 $175 $365
Select International Equity Fund........................... $25 $ 77 $131 $280
T. Rowe Price International Stock Portfolio................ $25 $ 78 $133 $283
Select Aggressive Growth Fund.............................. $23 $ 72 $124 $265
Select Capital Appreciation Fund........................... $24 $ 75 $129 $275
Select Value Opportunity Fund.............................. $24 $ 75 $129 $275
Select Growth Fund......................................... $23 $ 71 $122 $261
Select Strategic Growth Fund............................... $27 $ 82 $140 $297
Fidelity VIP Growth Portfolio.............................. $21 $ 66 $113 $243
Select Growth and Income Fund.............................. $22 $ 68 $117 $251
Fidelity VIP Equity-Income Portfolio....................... $20 $ 63 $108 $234
Fidelity VIP High Income Portfolio......................... $22 $ 67 $114 $246
Select Income Fund......................................... $20 $ 61 $104 $225
Money Market Fund.......................................... $18 $ 54 $ 94 $204
</TABLE>

8
<PAGE>
(2) At the end of the applicable time period, you would pay the following
expenses on a $1000 investment, assuming a 5% annual return on assets and
election of either an optional Enhanced Death Benefit Rider or an optional
Minimum Guaranteed Annuity Payout Rider(1) with a ten-year waiting period:

<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Select Emerging Markets Fund............................... $36 $111 $187 $387
Select International Equity Fund........................... $27 $ 84 $143 $304
T. Rowe Price International Stock Portfolio................ $28 $ 85 $145 $307
Select Aggressive Growth Fund.............................. $26 $ 80 $136 $290
Select Capital Appreciation Fund........................... $27 $ 83 $141 $299
Select Value Opportunity Fund.............................. $27 $ 83 $141 $299
Select Growth Fund......................................... $26 $ 78 $134 $286
Select Strategic Growth Fund............................... $29 $ 89 $152 $321
Fidelity VIP Growth Portfolio.............................. $24 $ 73 $126 $269
Select Growth and Income Fund.............................. $25 $ 76 $130 $277
Fidelity VIP Equity-Income Portfolio....................... $23 $ 71 $121 $260
Fidelity VIP High Income Portfolio......................... $24 $ 74 $127 $272
Select Income Fund......................................... $22 $ 68 $117 $251
Money Market Fund.......................................... $20 $ 62 $107 $231
</TABLE>

(3) At the end of the applicable time period, you would pay the following
expenses on a $1,000 investment, assuming a 5% annual return on assets and
election of both an optional Enhanced Death Benefit Rider and an optional
Minimum Guaranteed Annuity Payout Rider(1) with a ten-year waiting period:

<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Select Emerging Markets Fund............................... $39 $118 $199 $409
Select International Equity Fund........................... $30 $ 92 $156 $328
T. Rowe Price International Stock Portfolio................ $30 $ 92 $157 $331
Select Aggressive Growth Fund.............................. $28 $ 87 $148 $314
Select Capital Appreciation Fund........................... $29 $ 90 $153 $323
Select Value Opportunity Fund.............................. $29 $ 90 $153 $323
Select Growth Fund......................................... $28 $ 86 $146 $310
Select Strategic Growth Fund............................... $32 $ 97 $164 $345
Fidelity VIP Growth Portfolio.............................. $26 $ 81 $138 $293
Select Growth and Income Fund.............................. $27 $ 83 $142 $301
Fidelity VIP Equity-Income Portfolio....................... $25 $ 78 $134 $285
Fidelity VIP High Income Portfolio......................... $27 $ 82 $140 $296
Select Income Fund......................................... $25 $ 76 $130 $277
Money Market Fund.......................................... $23 $ 70 $119 $256
</TABLE>

(1)If the Minimum Guaranteed Annuity Payout (M-GAP) Rider is exercised, you may
only annuitize under a fixed annuity payout option involving a life contingency
at the Company's guaranteed fixed annuity option rates listed under the Annuity
Option Tables in your Contract.

9
<PAGE>
SUMMARY OF CONTRACT FEATURES

WHAT IS THE ALLMERICA SELECT CHARTER VARIABLE ANNUITY?

The Allmerica Select Charter variable annuity contract (Contract) is an
insurance contract designed to help you, the Owner, accumulate assets for your
retirement or other important financial goals on a tax-deferred basis. The
Contract combines the concept of professional money management with the
attributes of an annuity contract. Features available through the Contract
include:

- a customized investment portfolio;

- experienced professional investment advisers;

- tax deferral on earnings;

- guarantees that can protect your family;

- income payments that you can receive for life; and

- issue age up to the 90th birthday of the oldest Owner or Annuitant.

The Contract has two phases, an accumulation phase and, if you choose to
annuitize, an annuity payout phase. During the accumulation phase, you may
allocate your initial payment and any additional payments you choose to make
among the combination of portfolios of securities ("Underlying Funds") under
your Contract, the Guarantee Period Accounts, and the Fixed Account
(collectively "the investment options.") You select the investment options most
appropriate for your investment needs. As those needs change, you may also
change your allocation without incurring any tax consequences. Your Contract's
Accumulated Value is based on the investment performance of the Funds and any
accumulations in the Guarantee Period and Fixed Accounts. You do not pay income
taxes on any earnings under the Contract until you withdraw money. In addition,
during the accumulation phase, your beneficiaries receive certain protections in
the event of your death. See discussion below: WHAT HAPPENS UPON MY DEATH DURING
THE ACCUMULATION PHASE?

WHAT HAPPENS IN THE ANNUITY PAYOUT PHASE?

During the annuity payout phase, you, or the payee you designate, can receive
income based on several annuity payout options. You choose the annuity payout
option and the date for annuity benefit payments to begin. You also decide
whether you want variable annuity benefit payments based on the investment
performance of certain Underlying Funds, fixed-amount annuity benefit payments
with payment amounts guaranteed by the Company, or a combination of fixed-amount
and variable annuity benefit payments. Among the payout options available during
the annuity payout phase are:

- periodic payments for the Annuitant's lifetime;

- periodic payments for the Annuitant's life and the life of another person
selected by you;

- periodic payments for the Annuitant's lifetime with any remaining
guaranteed payments continuing for 10 years in the event that the
Annuitant dies before the end of ten years;

- periodic payments over a specified number of years (1 to 30). Under the
fixed version of this option you may reserve the right to convert
remaining payments to a lump-sum payout by electing a commutable option.
Variable period certain options are automatically commutable.

10
<PAGE>
An optional Minimum Guaranteed Annuity Payout (M-GAP) Rider is currently
available during the accumulation phase in most jurisdictions for a separate
monthly charge. If elected, the Rider provides a guaranteed minimum amount of
income after the specified waiting period under a life contingent fixed annuity
payout option, subject to certain conditions. On each Contract anniversary a
Minimum Guaranteed Annuity Payout Benefit Base is determined. The Minimum
Guaranteed Annuity Payout Benefit Base (less any applicable premium taxes) is
the value that will be annuitized should you exercise the Rider. In order to
exercise the Rider, a fixed annuitization option involving a life contingency
must be selected. Annuitization under this Rider will occur at the Company's
guaranteed fixed annuity option rates listed under the Annuity Option Tables in
your Contract. The Minimum Guaranteed Annuity Payout Benefit Base is equal to
the greatest of:

(a) the Accumulated Value increased by any positive Market Value Adjustment, if
applicable; on the Contract anniversary that the M-GAP Benefit Base is being
determined,

(b) the Accumulated Value on the effective date of the Rider compounded daily at
an effective annual yield of 5% plus gross payments made thereafter
compounded daily at an effective annual yield of 5%, starting on the date
each payment is applied, proportionately reduced to reflect withdrawals; or

(c) the highest Accumulated Value on any Contract anniversary since the Rider
effective date, as determined after being increased for subsequent payments
and any positive Market Value Adjustment, if applicable, and proportionately
reduced for subsequent withdrawals.

For more details see "M. Optional Minimum Guaranteed Annuity Payout (M-GAP)
Rider" under DESCRIPTION OF THE CONTRACT.

WHO ARE THE KEY PERSONS UNDER THE CONTRACT?

The Contract is between you, (the "Owner"), and us, Allmerica Financial Life
Insurance and Annuity Company (for contracts issued in all jurisdictions except
Hawaii and New York) or First Allmerica Financial Life Insurance Company (for
contracts issued in Hawaii and New York). Each Contract has an Owner (or an
Owner and a Joint Owner, in which case one of the two must be an Annuitant), an
Annuitant (or an Annuitant and a Joint Annuitant) and one or more beneficiaries.
As Owner, you make payments, choose investment allocations, receive annuity
benefit payments (or designate someone else to receive annuity benefit payments)
and select the Annuitant and beneficiary. When a Contract is owned jointly, the
consent of both Owners is required in order to exercise any ownership rights.
The Annuitant is the individual whose life is used to measure the duration of
annuity benefit payments involving a life contingency. An Annuitant may be
changed at any time after issue of the Contract and prior to the Annuity Date,
unless (1) the Owner is a nonnatural person or (2) you are taking life
expectancy distributions. For more information about life expectancy
distributions, see "F. Withdrawals." At all times there must be at least one
Annuitant. If an Annuitant dies and a replacement is not named, you will become
the new Annuitant. The beneficiary is the person, persons or entity entitled to
the death benefit prior to the Annuity Date and who, under certain
circumstances, may be entitled to annuity benefit payments upon the death of an
Owner on or after the Annuity Date.

HOW MUCH CAN I INVEST AND HOW OFTEN?

The number and frequency of your payments are flexible, subject only to a
$25,000 minimum for your initial payment and a $100 minimum for any additional
payments. In addition, a minimum of $1,000 is always required to establish a
Guarantee Period Account.

WHAT ARE MY INVESTMENT CHOICES?

You may allocate payments among the Sub-Accounts investing in the Funds, the
Guarantee Period Accounts, and the Fixed Account.

11
<PAGE>
The fourteen Underlying Funds are:

- Select Emerging Markets Fund
Managed by Schroder Investment Management North America Inc.

- Select International Equity Fund
Managed by Bank of Ireland Asset Management (U.S.) Limited

- T. Rowe Price International Stock Portfolio
Managed by Rowe Price-Fleming International, Inc.

- Select Aggressive Growth Fund
Managed by Nicholas-Applegate Capital Management, L.P.

- Select Capital Appreciation Fund
Managed by T. Rowe Price Associates, Inc.

- Select Value Opportunity Fund
Managed by Cramer Rosenthal McGlynn, LLC

- Select Growth Fund
Managed by Putnam Investment Management, Inc.

- Select Strategic Growth Fund
Managed by TCW Investment Management Company

- Fidelity VIP Growth Portfolio
Managed by Fidelity Management & Research Company

- Select Growth and Income Fund
Managed by J. P. Morgan Investment Management Inc.

- Fidelity VIP Equity-Income Portfolio
Managed by Fidelity Management & Research Company

- Fidelity VIP High Income Portfolio
Managed by Fidelity Management & Research Company

- Select Income Fund*
Managed by Standish, Ayer & Wood, Inc.

- Money Market Fund
Managed by Allmerica Asset Management, Inc.

Each Underlying Fund operates pursuant to different investment objectives and
this range of investment options enables you to allocate your money among the
Underlying Funds to meet your particular investment needs. For a more detailed
description of the Underlying Funds, see INVESTMENT OBJECTIVES AND POLICIES.

* On or about July 1, 2000, subject to regulatory approval, shares of the Select
Investment Grade Income Fund will be substituted for shares of the Select Income
Fund. Allmerica Asset Management, Inc. will manage the Select Investment Grade.

12
<PAGE>
GUARANTEE PERIOD ACCOUNTS. Assets supporting the guarantees under the Guarantee
Period Accounts are held in the Company's Separate Account GPA, a non-unitized
insulated separate account, except in California where assets are held in the
Company's General Account. Values and benefits calculated on the basis of
Guarantee Period Account allocations, however, are obligations of the Company's
General Account. Amounts allocated to a Guarantee Period Account earn a
Guaranteed Interest Rate declared by the Company. The level of the Guaranteed
Interest Rate depends on the number of years of the Guarantee Period selected.
The Company may offer up to eight Guarantee Periods ranging from three to ten
years in duration. Once declared, the Guaranteed Interest Rate will not change
during the duration of the Guarantee Period. If amounts allocated to a Guarantee
Period Account are transferred, surrendered or applied to any annuity option at
any time other than the day following the last day of the applicable Guarantee
Period, a Market Value Adjustment will apply that may increase or decrease the
account's value; however, this adjustment will never be applied against your
principal. In addition, earnings in a Guarantee Period Account after application
of the Market Value Adjustment will not be less than an effective annual rate of
3%. For more information about the Guarantee Period Accounts and the Market
Value Adjustment, see GUARANTEE PERIOD ACCOUNTS.

THE GUARANTEE PERIOD ACCOUNTS MAY NOT BE AVAILABLE IN ALL STATES.

FIXED ACCOUNT. The Fixed Account is part of the General Account, which consists
of all the Company's assets other than those allocated to the Variable Account
and any other separate account. Allocations to the Fixed Account are guaranteed
as to principal and a minimum rate of interest. Additional excess interest may
be declared periodically at the Company's discretion. The initial rate in effect
on the date an amount is allocated to the Fixed Account is guaranteed for one
year from that date. For more information about the Fixed Account, see APPENDIX
A -- MORE INFORMATION ABOUT THE FIXED ACCOUNT.

WHO ARE THE INVESTMENT ADVISERS OF THE UNDERLYING FUNDS AND HOW ARE THEY
SELECTED?

BARRA RogersCasey, Inc. ("BARRA RogersCasey"), a pension consulting firm,
assists the Company in the selection of the Contract's Underlying Funds. In
addition, BARRA RogersCasey assists the Trust in the selection of investment
advisers for the Funds of the Trust. BARRA RogersCasey provides consulting
services to pension plans representing hundreds of billions of dollars in total
assets and, in its consulting capacity, monitors the investment performance of
over 1000 investment advisers. BARRA RogersCasey is wholly-controlled by
BARRA, Inc. As a consultant, BARRA RogersCasey has no discretionary or decision-
making authority with respect to the Funds, and has no responsibility for any
investment advice or other services provided to the Funds by Allmerica Financial
Investment Management Services, Inc. ("AFIMS") or the investment advisers.

AFIMS, an affiliate of the Company, is the investment manager of the Trust.
AFIMS has entered into agreements with investment advisers ("Sub-Advisers")
selected by AFIMS and the Trustees in consultation with BARRA RogersCasey. Each
Sub-Adviser is selected by using strict objective, quantitative, and qualitative
criteria, with special emphasis on the Sub-Adviser's record in managing similar
portfolios. In consultation with BARRA RogersCasey, a committee monitors and
evaluates the ongoing performance of all of the Funds. The committee may
recommend the replacement of a Sub-Adviser of one of the Funds of the Trust, or
the addition or deletion of any other Funds. The committee includes members who
may be affiliated or unaffiliated with the Company and the Trust. The
Sub-Advisers (other than Allmerica Asset Management, Inc.) are not affiliated
with the Company or the Trust.

Fidelity Management & Research Company ("FMR") is the investment adviser of
Fidelity VIP. FMR is one of America's largest investment management
organizations and has its principal business address at 82 Devonshire Street,
Boston, MA. It is composed of a number of different companies, which provide a
variety of financial services and products. FMR is the original Fidelity
company, founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services.

13
<PAGE>
Rowe Price-Fleming International, Inc. (Price-Fleming) is the investment adviser
of T. Rowe Price. Price-Fleming, founded in 1979 as a joint venture between T.
Rowe Price Associates, Inc. and Robert Fleming Holdings, Limited, is one of the
largest no-load international mutual fund asset managers with approximately
$42.5 billion (as of December 31, 1999) under management in its offices in
Baltimore, London, Tokyo, Hong Kong, Singapore and Buenos Aires.

The following are the investment advisers of the Funds:

*On or about July 1, 2000, subject to regulatory approval, shares of the Select
Investment Grade Income Fund will be substituted for shares of the Select Income
Fund. Allmerica Asset Management, Inc. will manage the Select Investment Grade.

CAN I MAKE TRANSFERS AMONG THE INVESTMENT OPTIONS?

Yes. Prior to the Annuity Date, you may transfer among the Sub-Accounts
investing in the Underlying Funds, the Guarantee Period Accounts, and the Fixed
Account. You will incur no current taxes on transfers while your money remains
in the Contract. The first 12 transfers in a Contract year are guaranteed to be
free of a transfer charge. For each subsequent transfer in a Contract year, the
Company does not currently charge but reserves the right to assess a processing
charge guaranteed never to exceed $25. As of the date of this Prospectus,
transfers may be made to and among all of the available Sub-Accounts. However,
should additional Funds be added to the Contract, the Company reserves the right
to limit the number of Sub-Accounts which may be used during the life of the
Contract. See "D. Transfer Privilege" under DESCRIPTION OF THE CONTRACT.

You also may elect at no additional charge Automatic Transfers (Dollar Cost
Averaging) to gradually move money to one or more of the Underlying Funds or
Automatic Account Rebalancing to ensure assets remain allocated according to
your designated percentage allocation mix.

WHAT IF I NEED MY MONEY BEFORE THE ANNUITY PAYOUT PHASE BEGINS?

You may surrender your Contract or make withdrawals any time before the annuity
payout phase begins. A 10% federal tax penalty may apply on all amounts deemed
to be earnings if you are under age 59 1/2. A Market Value Adjustment may apply
to any withdrawal made from a Guarantee Period Account prior to the expiration
of the Guarantee Period.)

14
<PAGE>
WHAT HAPPENS UPON MY DEATH DURING THE ACCUMULATION PHASE?

If you or a Joint Owner (or an Annuitant in the event that the Owner is a
nonnatural person) should die before the Annuity Date, a death benefit will be
paid to the beneficiary.

The standard death benefit will equal the GREATER of: (1) the Accumulated Value
on the Valuation Date that the Company receives proof of death, increased by any
positive Market Value Adjustment or (2) gross payments, decreased
proportionately to reflect withdrawals (for each withdrawal, the proportionate
reduction is calculated as the death benefit under this option immediately prior
to the withdrawal, multiplied by the withdrawal amount, and divided by the
Accumulated Value immediately prior to the withdrawal).

If you are under age 89, you may elect an optional Enhanced Death Benefit Rider
at issue for a separate monthly charge. See "G. Death Benefit" under DESCRIPTION
OF THE CONTRACT. Under the Enhanced Death Benefit Rider:

I. If an Owner (or an Annuitant if the Owner is a nonnatural person) dies before
the Annuity Date and before the oldest Owner's 90th birthday, the death benefit
will equal the GREATEST of:

(a) the Accumulated Value on the Valuation Date that the Company receives proof
of death, increased by any positive Market Value Adjustment; or

(b) gross payments compounded daily at an effective annual yield of 5%, starting
on the date each payment is applied, decreased proportionately to reflect
withdrawals (in Hawaii and New York the 5% compounding is not available;
therefore, (b) equals gross payments decreased proportionately to reflect
withdrawals); or

(c) the highest Accumulated Value on any prior Contract anniversary, increased
for any positive Market Value Adjustment and subsequent payments and
decreased proportionately for subsequent withdrawals.

The (c) value is determined on each Contract anniversary. A snapshot is taken of
the current (a) value and compared to snapshots taken of the (a) value on all
prior Contract anniversaries, after all of the (a) values have been adjusted to
reflect subsequent payments and decreased proportionately for subsequent
withdrawals. The highest of all of these adjusted (a) values then becomes the
(c) value. This (c) value becomes the floor below which the death benefit will
not drop and is locked-in until the next Contract anniversary. The values of
(b) and (c) will be decreased proportionately if withdrawals are taken.

II. If an Owner (or an Annuitant if the Owner is a nonnatural person) dies
before the Annuity Date but on or after the oldest Owner's 90th birthday, the
death benefit will equal the GREATER of:

(a) the Accumulated Value on the Valuation Date the Company receives proof of
death, increased by any positive Market Value Adjustment; or

(b) the death benefit, as calculated under I above, that would have been payable
on the Contract anniversary immediately prior to the oldest Owner's 90th
birthday, increased for subsequent payments and decreased proportionately
for subsequent withdrawals.

WHAT CHARGES WILL I INCUR UNDER MY CONTRACT?

If the Accumulated Value on a Contract anniversary or upon surrender is less
than $75,000, the Company will deduct a $35 Contract fee from your Contract.
(This fee may vary by state. See your Contract for more information.)

A deduction for state and local premium taxes, if any, may be made as described
under "D. Premium Taxes."

15
<PAGE>
The Company will deduct on a daily basis, an annual Mortality and Expense Risk
Charge and Administrative Expense Charge equal to 1.25% and 0.15%, respectively,
of the average daily net assets invested in each Fund. The Funds will incur
certain management fees and expenses which are described in "Other Charges"
under "A. Variable Account Deductions" and in the prospectuses of the Underlying
Funds, which accompany this Prospectus. These charges vary among the Underlying
Funds and may change from year to year. In addition, management fee waivers
and/or reimbursements may be in effect for certain or all of the Underlying
Funds. For specific information regarding the existence and effect of any
waivers/reimbursements see "Annual Underlying Fund Expenses" under the SUMMARY
OF FEES AND EXPENSES section.

Subject to state availability, optional benefit riders are currently available
for an additional charge equal to an annual rate of 0.25% for a Minimum
Guaranteed Annuity Payout (M-GAP) Rider with a ten-year waiting period, 0.15%
for a Minimum Guaranteed Annuity Payout (M-GAP) Rider with a fifteen-year
waiting period and 0.25% for an Enhanced Death Benefit Rider. This charge is
deducted from the Contract's Accumulated Value on the last day of each month
within which the Rider has been in effect and, if applicable, on the date the
Rider is terminated. For more information, see "G. Death Benefit" and "M.
Optional Minimum Guaranteed Annuity Payout (M-GAP) Rider" under DESCRIPTION OF
THE CONTRACT and see "C. Optional Benefit Rider Charges" under CHARGES AND
DEDUCTIONS.

CAN I EXAMINE THE CONTRACT?

Yes. Your Contract will be delivered to you after your purchase. If you return
the Contract to the Company within ten days of receipt, the Contract will be
cancelled. (There may be a longer period in certain states; see the "Right to
Examine" provision on the cover of your Contract.) If you cancel the Contract,
you will receive a refund of any amounts allocated to the Fixed and Guarantee
Period Accounts and the Accumulated Value of any amounts allocated to the
Sub-Accounts (plus any fees or charges that may have been deducted.) However, if
state law requires, or if the Contract was issued as an Individual Retirement
Annuity (IRA) you will generally receive a refund of your entire payment. In
certain states this refund may be the greater of (1) your entire payment or
(2) the amounts allocated to the Fixed and the Guarantee Period Accounts plus
the Accumulated Value of amounts in the Sub-Accounts, plus any fees or charges
previously deducted. See "B. Right to Cancel Individual Retirement Annuity" and
"C. Right to Cancel All Other Contracts" under DESCRIPTION OF THE CONTRACT.

CAN I MAKE FUTURE CHANGES UNDER MY CONTRACT?

You can make several changes after receiving your Contract:

- You may assign your ownership to someone else, except under certain
qualified plans.

- You may change an Annuitant at any time after Contract issue and prior to
the Annuity Date, unless the Owner is a nonnatural person or you are
taking life expectancy distributions.

- You may change the beneficiary, unless you have designated a beneficiary
irrevocably.

- You may change your allocation of payments.

- You may make transfers among your accounts prior to the Annuity Date
without any tax consequences.

- You may cancel your Contract within ten days of delivery (or longer if
required by state law).

16
<PAGE>
DESCRIPTION OF THE COMPANIES, THE VARIABLE ACCOUNTS,
THE TRUST, FIDELITY VIP, AND T. ROWE PRICE

THE COMPANIES. Allmerica Financial Life Insurance and Annuity Company
("Allmerica Financial") is a life insurance company organized under the laws of
Delaware in July 1974. Its Principal Office is located at 440 Lincoln Street,
Worcester, MA 01653, Telephone 508-855-1000. Allmerica Financial is subject to
the laws of the state of Delaware governing insurance companies and to
regulation by the Commissioner of Insurance of Delaware. In addition, Allmerica
Financial is subject to the insurance laws and regulations of other states and
jurisdictions in which it is licensed to operate. As of December 31, 1999,
Allmerica Financial had over $17 billion in assets and over $26 billion of life
insurance in force.

Effective October 1, 1995, Allmerica Financial changed its name from SMA Life
Assurance Company to Allmerica Financial Life Insurance and Annuity Company.
Allmerica Financial is a wholly owned subsidiary of First Allmerica Financial
Life Insurance Company which, in turn, is a wholly owned subsidiary of Allmerica
Financial Corporation ("AFC").

First Allmerica Financial Life Insurance Company ("First Allmerica"), organized
under the laws of Massachusetts in 1844, is among the five oldest life insurance
companies in America. As of December 31, 1999, First Allmerica and its
subsidiaries had over $25 billion in combined assets and over $43 billion of
life insurance in force. Effective October 16, 1995, First Allmerica converted
from a mutual life insurance company known as State Mutual Life Assurance
Company of America to a stock life insurance company and adopted its present
name. First Allmerica is a wholly owned subsidiary of AFC. First Allmerica's
principal office ("Principal Office") is located at 440 Lincoln Street,
Worcester, MA 01653, Telephone 508-855-1000.

First Allmerica is subject to the laws of the Commonwealth of Massachusetts
governing insurance companies and to regulation by the Commissioner of Insurance
of Massachusetts. In addition, First Allmerica is subject to the insurance laws
and regulations of other states and jurisdictions in which it is licensed to
operate.

Both companies are charter members of the Insurance Marketplace Standards
Association ("IMSA"). Companies that belong to IMSA subscribe to a rigorous set
of standards that cover the various aspects of sales and service for
individually sold life insurance and annuities. IMSA members have adopted
policies and procedures that demonstrate a commitment to honesty, fairness and
integrity in all customer contacts involving sales and service of individual
life insurance and annuity products.

ALLMERICA SELECT SEPARATE ACCOUNT. Each Company maintains a separate account
called the Allmerica Select Separate Account (the "Variable Account"). The
Variable Account of Allmerica Financial was authorized by vote of the Board of
Directors of the Company on March 5, 1992 and the Variable Account of First
Allmerica was authorized by vote of the Board of Directors of the Company on
August 20, 1991. Each Variable Account is registered with the SEC as a unit
investment trust under the Investment Company Act of 1940 ("the 1940 Act"). This
registration does not involve the supervision or management of investment
practices or policies of the Variable Accounts by the SEC.

The Allmerica Select Separate Account is a separate investment account of the
Company with fourteen Sub-Accounts. The assets used to fund the variable
portions of the Contract are set aside in Sub-Accounts kept separate from the
general assets of the Company. Each Sub-Account is administered and accounted
for as part of the general business of the Company. The income, capital gains or
capital losses of each Sub-Account, however, are allocated to each Sub-Account,
without regard to any other income, capital gains, or capital losses of the
Company. Obligations under the Contracts are obligations of the Company. Under
Delaware and Massachusetts law, the assets of the Variable Account may not be
charged with any liabilities arising out of any other business of the Company.

The Company reserves the right, subject to compliance with applicable law, to
change the names of the Separate Account and the Sub-Accounts. The Company also
offers other variable annuity contracts investing

17
<PAGE>
in the Variable Account which are not discussed in this Prospectus. In addition,
the Variable Account may invest in other underlying funds which are not
available to the contracts described in this Prospectus.

ALLMERICA INVESTMENT TRUST. Allmerica Investment Trust (the "Trust") is an
open-end, diversified, management investment company registered with the SEC
under the 1940 Act. The Trust was established as a Massachusetts business trust
on October 11, 1984, for the purpose of providing a vehicle for the investment
of assets of various separate accounts established by the Company or other
insurance companies. Ten investment portfolios of the Trust currently are
available under the Contract, each issuing a series of shares: Select Emerging
Markets Fund, Select International Equity Fund, Select Aggressive Growth Fund,
Select Capital Appreciation Fund, Select Value Opportunity Fund, Select Growth
Fund, Select Strategic Growth Fund, Select Growth and Income Fund, Select Income
Fund and the Money Market Fund. The assets of each Fund are held separate from
the assets of the other Funds. Each Fund operates as a separate investment
vehicle and the income or losses of one Fund have no effect on the investment
performance of another Fund. Shares of the Trust are not offered to the general
public but solely to such variable accounts.

The trustees have overall responsibility for the supervision of the affairs of
the Trust. The Trustees have entered into a management agreement ("Management
Agreement") with Allmerica Financial Investment Management Services, Inc.,
("AFIMS") a wholly owned subsidiary of Allmerica Financial, to handle the day-
to-day affairs of the Trust. AFIMS, subject to Trustee review, is responsible
for the general management of the Funds. AFIMS also performs certain
administrative and management services for the Trust, furnishes to the Trust all
necessary office space, facilities and equipment and pays the compensation, if
any, of officers and Trustees who are affiliated with AFIMS.

AFIMS has entered into agreements with investment advisers ("Sub-Advisers")
selected by AFIMS and the Trustees, in consultation with BARRA
RogersCasey, Inc. ("BARRA RogersCasey") a pension consulting firm. The cost of
such consultation is borne by AFIMS. BARRA RogersCasey provides consulting
services to pension plans representing hundreds of billions of dollars in total
assets and, in its consulting capacity, monitors the investment performance of
over 1000 investment advisers. BARRA RogersCasey is wholly controlled by
BARRA, Inc. As a consultant, BARRA RogersCasey has no discretionary or
decision-making authority with respect to the Funds and has no responsibility
for any investment advice or other services provided to the Funds by AFIMS or
the Sub-Advisers. Under each Sub-Adviser agreement, the Sub-Adviser is
authorized to engage in portfolio transactions on behalf of the applicable Fund,
subject to the Trustees' and/ or AFIMS' instructions. AFIMS is solely
responsible for the payment of all fees for investment management services.

Each independent Sub-Adviser is selected by using strict objective,
quantitative, and qualitative criteria, with special emphasis on the
Sub-Adviser's record in managing similar portfolios. In consultation with BARRA
RogersCasey, a committee monitors and evaluates the ongoing performance of all
of the Funds. The committee may recommend the replacement of a Sub-Adviser of
one of the Funds of the Trust, or the addition or deletion of a Fund. The
committee includes members who may be affiliated or unaffiliated with the
Company and the Trust. The Sub-Advisers (other than Allmerica Asset
Management, Inc.) are not affiliated with the Company or the Trust.

Other than expenses specifically assumed by AFIMS under the Management
Agreement, the Trust bears all expenses incurred in its operation including fees
and expenses associated with the registration and qualification of the Trust's
shares under the Securities Act of 1933, other fees payable to the SEC,
independent public accountant fees, legal and custodian fees, association
membership dues, taxes, interest, insurance premiums, brokerage commissions,
fees and expenses of the Trustees who are not affiliated with AFIMS, expenses
for proxies, prospectuses, reports to shareholders and other expenses.

FIDELITY VARIABLE INSURANCE PRODUCTS FUND. Fidelity Variable Insurance Products
Fund ("Fidelity VIP") managed by Fidelity Management & Research Company ("FMR"),
is an open-end, diversified management investment company organized as a
Massachusetts business trust on November 13, 1981, and registered with

18
<PAGE>
the SEC under the 1940 Act. Three of its investment portfolios are available
under the Policy: Fidelity VIP High Income Portfolio, Fidelity VIP Equity-Income
Portfolio, and Fidelity VIP Growth Portfolio.

Various Fidelity companies perform certain activities required to operate
Fidelity VIP. FMR is one of America's largest investment management
organizations and has its principal business address at 82 Devonshire Street,
Boston, MA. It is composed of a number of different companies, which provide a
variety of financial services and products. FMR is the original Fidelity
company, founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services. As part of their
operating expenses, the portfolios of Fidelity VIP pay a monthly investment
management fee to FMR for managing investment and business affairs. The
prospectus of Fidelity VIP contains additional information concerning the
portfolios, including information about additional expenses paid by the
portfolios, and should be read in conjunction with this Prospectus.

T. ROWE PRICE INTERNATIONAL SERIES, INC. T. Rowe Price International
Series, Inc. ("T. Rowe Price"), managed by Rowe Price-Fleming
International, Inc. ("Price-Fleming"), is an open-end, diversified management
investment company organized as a Maryland corporation in 1994 and registered
with the SEC under the 1940 Act. Price-Fleming, founded in 1979 as a joint
venture between T. Rowe Price Associates, Inc. and Robert Fleming Holdings,
Limited, is one the largest no-load international mutual fund asset managers
with approximately $42.5 billion (as of December 31, 1999) under management in
its offices in Baltimore, London, Tokyo, Hong Kong, Singapore and Buenos Aires.
One of its investment portfolios is available under the Contracts: the T. Rowe
Price International Stock Portfolio. One of its affiliates, T. Rowe Price
Associates, Inc., serves as the Sub-Adviser to the Select Capital Appreciation
Fund.

INVESTMENT OBJECTIVES AND POLICIES

A summary of investment objectives of each of the Underlying Funds is set forth
below. MORE DETAILED INFORMATION REGARDING THE INVESTMENT OBJECTIVES,
RESTRICTIONS AND RISKS, EXPENSES PAID BY THE UNDERLYING FUNDS, AND OTHER
RELEVANT INFORMATION REGARDING THE UNDERLYING INVESTMENT COMPANIES, MAY BE FOUND
IN THE PROSPECTUSES OF THE TRUST, FIDELITY VIP AND T. ROWE PRICE, WHICH
PROSPECTUSES ACCOMPANY THIS PROSPECTUS, AND SHOULD BE READ CAREFULLY BEFORE
INVESTING. Also, the Statements of Additional Information ("SAI") of the
Underlying Funds are available upon request. There can be no assurance that the
investment objectives of the Underlying Funds can be achieved or that the value
of the Contract will equal or exceed the aggregate amount of the purchase
payments made under the Contract.

SELECT EMERGING MARKETS FUND -- seeks long-term growth of capital by investing
in the world's emerging markets. The Sub-Adviser for the Select Emerging Markets
Fund is Schroder Investment Management North America Inc.

SELECT INTERNATIONAL EQUITY FUND -- seeks maximum long-term total return
(capital appreciation and income). The Fund will invest primarily in common
stocks of established non-U.S. companies. The Sub-Adviser for the Select
International Equity Fund is Bank of Ireland Asset Management (U.S.) Limited.

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO -- seeks long-term growth of capital
through investments primarily in common stocks of established, non-U.S.
companies. The manager of the Portfolio is Rowe Price-Fleming
International, Inc.

SELECT AGGRESSIVE GROWTH FUND -- seeks above-average capital appreciation by
investing primarily in common stocks of companies which are believed to have
significant potential for capital appreciation. The Sub-Adviser for the Select
Aggressive Growth Fund is Nicholas-Applegate Capital Management L.P.

SELECT CAPITAL APPRECIATION FUND -- seeks long-term growth of capital.
Realization of income is not a significant investment consideration and any
income realized on the Fund's investments will be incidental to its primary
objective. The Fund will invest primarily in common stock of industries and
companies which are

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experiencing favorable demand for their products and services, and which operate
in a favorable competitive environment and regulatory climate. The Sub-Adviser
for the Select Capital Appreciation Fund is T. Rowe Price Associates, Inc.

SELECT VALUE OPPORTUNITY FUND -- seeks long-term growth of capital by investing
principally in diversified portfolio of common stocks of small and mid-size
companies whose securities at the time of purchase are considered by the
Sub-Adviser to be undervalued. The Sub-Adviser for the Select Value Opportunity
Fund is Cramer Rosenthal McGlynn, LLC.

SELECT GROWTH FUND -- seeks to achieve growth of capital by investing in a
diversified portfolio consisting primarily of common stocks selected on the
basis of their long-term growth potential. The Sub-Adviser for the Select Growth
Fund is Putnam Investment Management, Inc.

SELECT STRATEGIC GROWTH FUND -- seeks long-term growth of capital by investing
primarily in common stocks of established companies. The Sub-Adviser for the
Select Strategic Growth Fund is TCW Investment Management Company.

FIDELITY VIP GROWTH PORTFOLIO -- seeks to achieve capital appreciation. The
Portfolio normally purchases common stocks, although its investments are not
restricted to any one type of security. Capital appreciation also may be found
in other types of securities, including bonds and preferred stocks.

SELECT GROWTH AND INCOME FUND -- seeks a combination of long-term growth of
capital and current income. The Fund will invest primarily in dividend-paying
common stocks and securities convertible into common stocks. The Sub-Adviser for
the Select Growth and Income Fund is J. P. Morgan Investment Management Inc.

FIDELITY VIP EQUITY-INCOME PORTFOLIO -- seeks reasonable income by investing
primarily in income-producing equity securities. In choosing these securities,
the Portfolio also will consider the potential for capital appreciation. The
Portfolio's goal is to achieve a yield which exceeds the composite yield on the
securities comprising the S&P 500.

FIDELITY VIP HIGH INCOME PORTFOLIO -- seeks to obtain a high level of current
income by investing primarily in high-yielding, lower-rated fixed-income
securities (commonly referred to as junk bonds), while also considering growth
of capital. These securities are often considered to be speculative and involve
greater risk of default or price changes than securities assigned a high quality
rating. For more information about these lower-rated securities, see the
Fidelity VIP prospectus.

SELECT INCOME FUND* -- seeks a high level of current income. The Fund will
invest primarily in investment-grade, fixed-income securities. The Sub-Adviser
for the Select Income Fund is Standish, Ayer, & Wood, Inc.

MONEY MARKET FUND -- seeks to obtain maximum current income consistent with the
preservation of capital and liquidity. Allmerica Asset Management, Inc. is the
Sub-Adviser of the Money Market Fund.

* On or about July 1, 2000, subject to regulatory approval, shares of the Select
Investment Grade Income Fund will be substituted for shares of the Select Income
Fund. The Select Investment Grade Income Fund seeks as high a level of total
return, which includes capital appreciation as well as income, as is consistent
with prudent investment management. Allmerica Asset Management, Inc. is the
Sub-Adviser of the Select Investment Grade Income Fund.

If there is a material change in the investment policy of a Fund, the Owner will
be notified of the change. If the Owner has Accumulated Value allocated to that
Fund, he or she may have the Accumulated Value reallocated without charge to
another Fund or to the Fixed Account, where available, on written request
received by the

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Company within sixty (60) days of the later of (1) the effective date of such
change in the investment policy, or (2) the receipt of the notice of the Owner's
right to transfer.

PERFORMANCE INFORMATION

The Contract was first offered to the public by Allmerica Financial Life
Insurance and Annuity Company in 1996 and by First Allmerica Financial Life
Insurance Company in 1997. The Company, however, may advertise "total return"
and "average annual total return" performance information based on (1) the
periods that the Sub-Accounts have been in existence and (2) the periods that
the Underlying Funds have been in existence. Performance results in Tables 1A
and 2A are calculated with all charges assumed to be those applicable to the
Contract, the Sub-Accounts and the Underlying Funds and also assume that the
Contract is surrendered at the end of the applicable period. Performance results
in Tables 1B and 2B do not include the Contract fee and assume that the Contract
is not surrendered at the end of the applicable period. Both the total return
and yield figures are based on historical earnings and are not intended to
indicate future performance.

The total return of a Sub-Account refers to the total of the income generated by
an investment in the Sub-Account and of the changes in the value of the
principal (due to realized and unrealized capital gains or losses) for a
specified period, reduced by Variable Account charges, and expressed as a
percentage.

The average annual total return represents the average annual percentage change
in the value of an investment in the Sub-Account over a given period of time. It
represents averaged figures as opposed to the actual performance of a
Sub-Account, which will vary from year to year.

The yield of the Sub-Account investing in the Money Market Fund refers to the
income generated by an investment in the Sub-Account over a seven-day period
(which period will be specified in the advertisement). This income is then
"annualized" by assuming that the income generated in the specific week is
generated over a 52-week period. This annualized yield is shown as a percentage
of the investment. The "effective yield" calculation is similar but, when
annualized, the income earned by an investment in the Sub-Account is assumed to
be reinvested. Thus the effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.

The yield of a Sub-Account investing in a Fund other than the Money Market Fund
refers to the annualized income generated by an investment in the Sub-Account
over a specified 30-day or one-month period. The yield is calculated by assuming
that the income generated by the investment during that 30-day or one- month
period is generated each period over a 12-month period and is shown as a
percentage of the investment.

Quotations of average annual total return as shown in Table 1A are calculated in
the manner prescribed by the SEC and show the percentage rate of return of a
hypothetical initial investment of $1,000 for the most recent one, five and ten
year period or for a period covering the time the Sub-Account has been in
existence, if less than the prescribed periods. The calculation is adjusted to
reflect the deduction of the annual Sub-Account asset charge of 1.40%, the $30
annual Contract fee, the Underlying Fund charges and the surrender charge which
would be assessed if the investment were completely withdrawn at the end of the
specified period. The calculation is not adjusted to reflect the deduction of a
Minimum Guaranteed Annuity Payout Rider charge. Quotations of supplemental
average total returns, as shown in Table 1B, are calculated in exactly the same
manner and for the same periods of time except that they do not reflect the
Contract fee and assume that the Contract is not surrendered at the end of the
periods shown.

The performance shown in Tables 2A and 2B of Appendix B and C is calculated in
exactly the same manner as that in Tables 1A and 1B of Appendix B and C
respectively; however, the period of time is based on the Underlying Fund's
lifetime, which may predate the Sub-Account's inception date. These performance
calculations are based on the assumption that the Sub-Account corresponding to
the applicable Underlying Fund was actually in existence throughout the stated
period and that the contractual charges and expenses during that

21
<PAGE>
period were equal to those currently assessed under the Contract. For more
detailed information about these performance calculations, including actual
formulas, see the SAI.

Performance Tables for Contracts issued by Allmerica Financial Life Insurance
and Annuity Company can be found in Appendix B. Performance Tables for Contracts
issued by First Allmerica Financial Life Insurance Company can be found in
Appendix C.

PERFORMANCE INFORMATION FOR ANY SUB-ACCOUNT REFLECTS ONLY THE PERFORMANCE OF A
HYPOTHETICAL INVESTMENT IN THE SUB-ACCOUNT DURING THE TIME PERIOD ON WHICH THE
CALCULATIONS ARE BASED. PERFORMANCE INFORMATION SHOULD BE CONSIDERED IN LIGHT OF
THE INVESTMENT OBJECTIVES AND POLICIES AND RISK CHARACTERISTICS OF THE
UNDERLYING FUND IN WHICH THE SUB-ACCOUNT INVESTS AND THE MARKET CONDITIONS
DURING THE GIVEN TIME PERIOD, AND SHOULD NOT BE CONSIDERED AS A REPRESENTATION
OF WHAT MAY BE ACHIEVED IN THE FUTURE.

Performance information for a Sub-Account may be compared, in reports and
promotional literature, to: (1) the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500"), Dow Jones Industrial Average ("DJIA"), Shearson Lehman
Aggregate Bond Index or other unmanaged indices so that investors may compare
the Sub-Account results with those of a group of unmanaged securities widely
regarded by investors as representative of the securities markets in general;
(2) other groups of variable annuity separate accounts or other investment
products tracked by Lipper, Inc., a widely used independent research firm which
ranks mutual funds and other investment products by overall performance,
investment objectives, and assets, or tracked by other services, companies,
publications, or persons, who rank such investment products on overall
performance or other criteria; or (3) the Consumer Price Index (a measure for
inflation) to assess the real rate of return from an investment in the
Sub-Account. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions for administrative and management costs and
expenses. In addition, relevant broad-based indices and performance from
independent sources may be used to illustrate the performance of certain
Contract features.

At times, the Company may also advertise the ratings and other information
assigned to it by independent rating organizations such as A.M. Best Company
("A.M. Best"), Moody's Investors Service ("Moody's"), Standard & Poor's
Insurance Rating Services ("S&P") and Duff & Phelps. A.M. Best's and Moody's
ratings reflect their current opinion of the Company's relative financial
strength and operating performance in comparison to the norms of the life/health
insurance industry. S&P's and Duff & Phelps' ratings measure the ability of an
insurance company to meet its obligations under insurance policies it issues and
do not measure the ability of such companies to meet other non-policy
obligations. The ratings also do not relate to the performance of the Underlying
Funds.

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<PAGE>
DESCRIPTION OF THE CONTRACT

A. PAYMENTS

The Company issues a contract when its underwriting requirements, which include
receipt of the initial payment and allocation instructions by the Company at its
Principal Office, are met. These requirements also may include the proper
completion of an application; however, where permitted, the Company may issue a
Contract without completion of an application and/or signature for certain
classes of Contracts.

Payments are to be made payable to the Company. A net payment is equal to the
payment received less the amount of any applicable premium tax. The initial net
payment will be credited to the Contract and allocated among the requested
investment options as of the date that all issue requirements are properly met.
If all issue requirements are not completed within five business days of the
Company's receipt of the initial payment, the payment will be returned
immediately unless the applicant authorizes the Company to retain it pending
completion of all issue requirements. Subsequent payments will be credited as of
the Valuation Date received at the Principal Office on the basis of accumulation
unit value next determined after receipt.

Payments may be made to the Contract at any time prior to the Annuity Date, or
prior to payment of the death benefit, subject to certain minimums:

- Currently, the initial payment must be at least $25,000.

- Each subsequent payment must be at least $100.

- The minimum allocation to a Guarantee Period Account is $1,000. If less
than $1,000 is allocated to a Guarantee Period Account, the Company
reserves the right to apply that amount to the Money Market Fund of the
Trust.

Generally, unless otherwise requested, all payments will be allocated among the
investment options in the same proportion that the initial net payment is
allocated or, if subsequently changed, according to the most recent allocation
instructions. As of the date of this Prospectus, payments to the Contract may be
allocated among all of the current Sub-Accounts during the life of the Contract
and prior to the Annuity Date. However, should additional Funds be added to the
Contract, the Company reserves the right to limit the number of Sub-Accounts
among which payments may be allocated.

The Owner may change allocation instructions for new payments pursuant to a
written or telephone request. If the Owner elects telephone requests, a properly
completed authorization must be on file before telephone requests will be
honored. The policy of the Company and its agents and affiliates is that they
will not be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. The Company will employ reasonable procedures
to confirm that instructions communicated by telephone are genuine; otherwise,
the Company may be liable for any losses due to unauthorized or fraudulent
instructions. Such procedures may include, among other things, requiring some
form of personal identification prior to acting upon instructions received by
telephone. All telephone instructions are tape-recorded.

From time to time, where permitted by law, the Company may credit additional
amounts to Contracts when Contracts are sold to individuals or groups of
individuals in a manner that reduces sales expenses. The Company will consider
factors such as the following: (1) the size and type of group or class, and the
persistency expected from that group or class; (2) the total amount of payments
to be received, and the manner in which payments are remitted; (3) the purpose
for which the Contracts are being purchased, and whether that purpose makes it
likely that costs and expenses will be reduced; (4) other transactions where
sales expenses are likely to be reduced; or (5) the level of commissions paid to
selling broker-dealers or certain financial institutions with respect to
Contracts within the same group or class (for example, broker-dealers who offer
this Contract in connection with financial planning services offered on a fee
for service basis). The Company

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<PAGE>
may also credit amounts to Contracts, where either the Owner or the Annuitant on
the issue date is within the following class of individuals ("eligible
persons"): employees and registered representatives of any broker-dealer which
has entered into a sales agreement with the Company to sell the Contract;
employees of the Company, its affiliates and subsidiaries; officers, directors,
trustees and employees of any of the Underlying Funds, investment managers or
sub-advisers of the Underlying Funds; and the spouses of and immediate family
members residing in the same household with such eligible persons. "Immediate
family members" means children, siblings, parents and grandparents.

B. RIGHT TO CANCEL INDIVIDUAL RETIREMENT ANNUITY

An individual purchasing a Contract intended to qualify as an IRA may cancel the
Contract at any time within ten days after receipt of the Contract and receive a
refund. In order to cancel the Contract, the Owner must mail or deliver the
Contract to the agent through whom the Contract was purchased, to the Principal
Office of the Company at 440 Lincoln Street, Worcester, MA 01653, or to an
authorized representative. Mailing or delivery must occur within ten days after
receipt of the Contract for cancellation to be effective.

Within seven days the Company will provide a refund equal to the gross
payment(s) received. In some states, however, the refund may equal the greater
of (a) gross payments or (b) any amounts allocated to the Fixed and the
Guarantee Period Accounts plus the Accumulated Value of amounts allocated to the
Variable Account plus any amounts deducted under the Contract or by the Funds
for taxes, charges or fees. At the time the Contract is issued, the "Right to
Examine" provision on the cover of the Contract will specifically indicate
whether the refund will be equal to gross payments or equal to the greater of
(a) or (b) as set forth above.

The liability of the Variable Account under this provision is limited to the
Owner's Accumulated Value in the Sub-Accounts on the date of cancellation. Any
additional amounts refunded to the Owner will be paid by the Company.

C. RIGHT TO CANCEL ALL OTHER CONTRACTS

An Owner may cancel the Contract at any time within ten days after receipt of
the Contract (or longer if required by state law) and receive a refund. In most
states, the Company will pay the Owner an amount equal to the sum of (1) the
difference between the amount paid, including fees, and any amount allocated to
the Variable Account, and (2) the Accumulated Value of amounts allocated to the
Variable Account as of the date the request is received. If the Contract was
purchased as an IRA or issued in a state that requires a full refund of the
initial payments(s), the IRA cancellation right described above will be used. At
the time the Contract is issued, the "Right to Examine" provision on the cover
of the Contract will specifically indicate what the refund will be and the time
period allowed to exercise the right to cancel.

In order to comply with New York regulations concerning the purchase of a new
annuity contract to replace an existing life or annuity contract (a
"replacement"), an Owner who purchases the Contract in New York as a replacement
may cancel within 60 days after receipt. In order to cancel the Contract, the
Owner must mail or deliver it to the Company's Principal Office or to one of its
authorized representatives. The Company will refund an amount equal to the
Surrender Value plus all fees and charges and the Contract will be void from the
beginning.

D. TRANSFER PRIVILEGE

At any time prior to the Annuity Date, the Owner may transfer amounts among
investment options upon written or telephone request to the Company. As of the
date of this Prospectus, transfers may be made to and among all of the available
Sub-Accounts. However, should additional Funds be added to the Contract, the
Company reserves the right to limit the number of Sub-Accounts which may be used
during the life of the Contract. As discussed in "A. Payments", a properly
completed authorization form must be on file before

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<PAGE>

telephone requests will be honored. Transfer values will be based on the
Accumulated Value next computed after receipt of the transfer request.

Transfers to a Guarantee Period Account must be at least $1,000. If the amount
to be transferred to a Guarantee Period Account is less than $1,000, the Company
may transfer that amount to the Money Market Fund. Transfers from a Guarantee
Period Account prior to the expiration of the Guarantee Period will be subject
to a Market Value Adjustment.

The first 12 transfers in a Contract year are guaranteed to be free of any
transfer charge. The Company does not currently charge for additional transfers
but reserves the right to assess a charge, guaranteed never to exceed $25, to
reimburse it for the expense of processing these additional transfers. If you
authorize periodic transfers under an Automatic Transfer option (Dollar Cost
Averaging), an Automatic Account Rebalancing option or an Asset Allocation Model
Reallocation, the first automatic transfer or rebalancing under a request counts
as one transfer for purposes of the 12 transfers guaranteed to be free of a
transfer charge in each Contract year. Each subsequent transfer or rebalancing
under that request is without charge and does not reduce the remaining number of
transfers which may be made free of charge in that Contract year.

Under the proposed substitution, during the period February 9, 2000 until the
date the Select Income Fund is replaced by the Select Investment Grade Income
Fund, an Owner with value in the Sub-Account investing in the Select Income Fund
may make one transfer of all amounts in that Sub-Account to and among any of the
other Sub-Accounts, the Fixed Account and/or the Guarantee Period Account
(subject to the $1,000 minimum for the GPA Account). This transfer will be free
of any transfer charge and will not count as one of the twelve transfers
guaranteed to be free of the transfer charge in each Contract year. In addition,
on the date the proposed substitution is completed, an Owner that has amounts
invested in the Select Investment Grade Income Fund as a result of the
substitution will have a period of 60 days following the substitution to make
one transfer of all amounts allocated to the Sub-Account investing in the Select
Investment Grade Income Fund to any one or more of the investment options
available under the Contract (subject to the minimum investment requirement of
the Guarantee Period Accounts.) This transfer of all value out of the Select
Investment Grade Income Fund will be free of any transfer charge and will not
count as one of the twelve transfers guaranteed to be free of the transfer
charge in that Contract Year. All Owners with value in the affected Sub-Account
on the date the substitution is made will receive written notice.

THE TERMS AND CONDITIONS OF THE PROPOSED SUBSTITUTION MAY BE SUBJECT TO CHANGE.
IN PARTICULAR, THE TERMS AND CONDITIONS OF ANY SEC EXEMPTION ORDER, IF AND WHEN
GRANTED, MAY REQUIRE CHANGES IN THE PROPOSED SUBSTITUTION.

The Company reserves the right to restrict transfer privileges when exercised by
a market timing firm or any other third party authorized to initiate
allocations, transfers or exchanges on behalf of multiple Contract owners, if
the execution of such transactions may disadvantage or potentially impair the
Contract rights of other Contract owners. The Company may, among other things,
not accept (1) the transfer or exchange instructions of any agent acting under a
power of attorney on behalf of more than one Contract owner, or (2) the transfer
or exchange instructions of individual Contract owners who have executed
pre-authorized transfer or exchange forms which are submitted by market timing
firms or other third parties on behalf of more than one Contract owner at the
same time.

ASSET ALLOCATION MODEL REALLOCATIONS. If an Owner elects to follow an asset
allocation strategy, the Owner may preauthorize transfers in accordance with the
chosen strategy. The Company may provide administrative or other support
services to independent third parties who provide recommendations as to such
allocation strategies. However, the Company does not engage any third parties to
offer investment allocation services of any type under this Contract, does not
endorse or review any investment allocation recommendations made by such third
parties and is not responsible for the investment allocations and transfers
transacted on the Owner's behalf. The Company does not charge for providing
additional asset allocation support services. Additional

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<PAGE>
information concerning asset allocation programs for which the Company is
currently providing support services may be obtained from a registered
representative or the Company.

AUTOMATIC TRANSFERS (DOLLAR COST AVERAGING) AND AUTOMATIC ACCOUNT REBALANCING
OPTIONS. The Owner may elect automatic transfers of a predetermined dollar
amount, not less than $100, on a periodic basis (monthly, bi-monthly, quarterly,
semi-annually or annually) from either the Fixed Account, the Sub-Account
investing in the Money Market Fund or the Sub-Account investing in the Select
Income Fund (the "source accounts") to one or more Sub-Accounts. Automatic
transfers may not be made into the Fixed Account, the Guarantee Period Accounts
or, if applicable, the Fund being used as the source account. If an automatic
transfer would reduce the balance in the source account to less than $100, the
entire balance will be transferred proportionately to the chosen Sub-Accounts.
Automatic transfers will continue until the amount in the source account on a
transfer date is zero or the Owner's request to terminate the option is received
by the Company. If additional amounts are allocated to the source account after
its balance has fallen to zero, this option will not restart automatically and
the Owner must provide a new request to the Company.

To the extent permitted by law, the Company reserves the right, from time to
time, to credit an enhanced interest rate to certain initial and/or subsequent
payments deposited into the Fixed Account and utilizing the Fixed Account as the
source account from which to process automatic transfers. For more information
see "Enhanced Automatic Transfer (Dollar Cost Averaging) Program" in the SAI.

The Owner may request automatic rebalancing of Sub-Account allocations on a
monthly, quarterly, semi-annual or annual basis in accordance with percentage
allocations specified by the Owner. As frequently as specified by the Owner, the
Company will review the percentage allocations in the Funds and, if necessary,
transfer amounts to ensure conformity with the designated percentage allocation
mix. If the amount necessary to re-establish the mix on any scheduled date is
less than $100, no transfer will be made. Automatic Account Rebalancing will
continue until the Owner's request to terminate or change the option is received
by the Company. As such, subsequent payments allocated in a manner different
from the percentage allocation mix in effect on the date the payment is received
will be reallocated in accordance with the existing mix on the next scheduled
date unless the Owner's timely request to change the mix or terminate the option
is received by the Company.

The Company reserves the right to limit the number of Sub-Accounts that may be
used for automatic transfers and rebalancing, and to discontinue either option
upon advance written notice. Currently, Dollar Cost Averaging and Automatic
Account Rebalancing may not be in effect simultaneously. Either option may be
elected at no additional charge when the Contract is purchased or at a later
date.

E. SURRENDER

At any time prior to the Annuity Date, an Owner may surrender the Contract and
receive an amount equal to the Surrender Value less any applicable tax
withholding. The Owner must return the Contract and a signed, written request
for surrender, satisfactory to the Company, to the Principal Office. The
Surrender Value will be calculated based on the Contract's Accumulated Value as
of the Valuation Date on which the request and the Contract are received at the
Principal Office.

After the Annuity Date, only Contracts annuitized under a commutable period
certain annuity option may be surrendered. The amount payable is the commuted
value of any unpaid annuity benefit payments, computed on the basis of the
assumed interest rate incorporated in such annuity benefit payments

Any amount surrendered is normally payable within seven days following the
Company's receipt of the surrender request. The Company reserves the right to
defer surrenders and withdrawals of amounts in each Sub-Account in any period
during which (1) trading on the New York Stock Exchange is restricted as
determined by the SEC or such Exchange is closed for other than weekends and
holidays, (2) the SEC has by

26
<PAGE>
order permitted such suspension, or (3) an emergency, as determined by the SEC,
exists such that disposal of portfolio securities or valuation of assets of a
separate account is not reasonably practicable.

The Company reserves the right to defer surrenders and withdrawals of amounts
allocated to the Company's Fixed Account and Guarantee Period Accounts for a
period not to exceed six months.

The surrender rights of Owners who are participants under Section 403(b) plans
or who are participants in the Texas Optional Retirement Program (Texas ORP) are
restricted; see "Tax-Sheltered Annuities" and "Texas Optional Retirement
Program."

Where an Owner who is trustee under a pension plan surrenders, in whole or in
part, a Contract on a terminating employee, the trustee will be permitted to
reallocate all or a part of the Accumulated Value under the Contract to other
Contracts issued by the Company and owned by the trustee. Any such reallocation
will be at the unit values for the Sub-Accounts as of the Valuation Date on
which a written, signed request is received at the Principal Office.

For important tax consequences which may result from surrender, see FEDERAL TAX
CONSIDERATIONS.

F. WITHDRAWALS

At any time prior to the Annuity Date, an Owner may withdraw a portion of the
Accumulated Value of his or her Contract, subject to the limits stated below.
The Owner must submit to the Principal Office a signed, written request for
withdrawal, satisfactory to the Company, The written request must indicate the
dollar amount the Owner wishes to receive and the investment options from which
such amount is to be withdrawn. Amounts withdrawn from a Guarantee Period
Account prior to the end of the applicable Guarantee Period will be subject to a
Market Value Adjustment against the remaining value, as described under
GUARANTEE PERIOD ACCOUNTS.

Where allocations have been made to more than one investment option, a
percentage of the withdrawal may be allocated to each such option. A withdrawal
from a Sub-Account will result in cancellation of a number of units equivalent
in value to the amount withdrawn, computed as of the Valuation Date that the
request is received at the Principal Office.

Each withdrawal must be in a minimum amount of $100. Except in New York where no
specific balance is required, no withdrawal will be permitted if the Accumulated
Value remaining under the Contract would be reduced to less than $1,000.
Withdrawals will be paid in accordance with the time limitations described under
"E. Surrender."

For important restrictions on withdrawals which are applicable to Owners who are
participants under Section 403(b) plans or under the Texas ORP, see FEDERAL TAX
CONSIDERATIONS, "Tax-Sheltered Annuities" and "Texas Optional Retirement
Program."

For important tax consequences which may result from withdrawals, see FEDERAL
TAX CONSIDERATIONS.

SYSTEMATIC WITHDRAWALS. The Owner may elect an automatic schedule of
withdrawals (systematic withdrawals) from amounts in the Sub-Accounts and/or the
Fixed Account on a monthly, bi-monthly, quarterly, semi-annual or annual basis.
Systematic withdrawals from Guarantee Period Accounts are not available. The
minimum amount of each automatic withdrawal is $100. The Owner may elect, by
written request, a specific dollar amount and the percentage of this amount to
be taken from each designated Sub-Account and/or the Fixed Account, or the Owner
may elect to withdraw a specific percentage of the Accumulated Value calculated
as of the withdrawal dates, and may designate the percentage of this amount
which should be taken

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<PAGE>
from each account. The first withdrawal will take place on the date the written
request is received at the Principal Office or, if later, on a date specified by
the Owner.

If a withdrawal would cause the remaining Accumulated Value to be less than
$1,000, systematic withdrawals may be discontinued. Systematic withdrawals will
cease automatically on the Annuity Date. The Owner may change or terminate
systematic withdrawals only by written request to the Principal Office.

LIFE EXPECTANCY DISTRIBUTIONS. Prior to the Annuity Date, an Owner who also is
the Annuitant may elect to make a series of systematic withdrawals from the
Contract according to the Company's life expectancy distribution ("LED") option
by returning a properly signed LED request form to the Principal Office.

The Owner may elect monthly, bi-monthly, quarterly, semi-annual, or annual LED
distributions, and may terminate the LED option at any time. Under contracts
issued in Hawaii and New York, the LED option will terminate automatically on
the maximum Annuity Date permitted under the Contract, at which time an Annuity
Option must be selected.

If an Owner elects the Company's LED option, in each calendar year a fraction of
the Accumulated Value is withdrawn based on the Owner's then life expectancy (or
the joint life expectancy of the Owner and a beneficiary.) The numerator of the
fraction is 1 (one) and the denominator of the fraction is the remaining life
expectancy of the Owner, as determined annually by the Company. The resulting
fraction, expressed as a percentage, is applied to the Accumulated Value at the
beginning of the year to determine the amount to be distributed during the year.
Under the Company's LED option, the amount withdrawn from the Contract changes
each year, because life expectancy changes each year that a person lives. For
example, actuarial tables indicate that a person age 70 has a life expectancy of
16 years, but a person who attains age 86 has a life expectancy of another 6.5
years. Where the Owner is a trust or other nonnatural person, the Owner may
elect the LED option based on the Annuitant's life expectancy.

(Note: this option may not produce annual distributions that meet the definition
of "substantially equal periodic payments" as defined under Code Section 72(t).
As such, the withdrawals may be treated by the Internal Revenue Service (IRS) as
premature distributions from the Contract and may be subject to a 10% federal
tax penalty. Owners seeking distributions over their life under this definition
should consult their tax advisor. For more information, see FEDERAL TAX
CONSIDERATIONS, "C. Taxation of the Contracts in General."

The Company may discontinue or change the LED option at any time, but not with
respect to election of the option made prior to the date of any change in the
LED option.

G. DEATH BENEFIT

In the event that an Owner (or an Annuitant if the Owner is a nonnatural person)
dies prior to the Annuity Date, the Company will pay the beneficiary a death
benefit, except where the Contract is continued as provided below in "H. The
Spouse of the Owner as Beneficiary."

DEATH OF AN OWNER PRIOR TO THE ANNUITY DATE. Upon the death of an Owner (or an
Annuitant if the Owner is a nonnatural person), a death benefit will be paid.
The standard death benefit will be equal to the GREATER of (a) the Accumulated
Value on the Valuation Date that the Company receives proof of death, increased
by any positive Market Value Adjustment; or (b) gross payments, decreased
proportionately to reflect withdrawals. For each withdrawal, the proportionate
reduction is calculated as the death benefit under this option immediately prior
to the withdrawal multiplied by the following fraction:

Amount of the Withdrawal
------------------------------------------------

Accumulated Value immediately prior to the withdrawal

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<PAGE>
OPTIONAL ENHANCED DEATH BENEFIT RIDER. When applying for the Contract, an Owner
who is under age 89 may elect the optional Enhanced Death Benefit Rider. Under
the Enhanced Death Benefit Rider:

I. If an Owner (or an Annuitant if the Owner is a nonnatural person) dies before
the Annuity Date and before the oldest Owner's 90th birthday, the death benefit
will equal the GREATEST of:

(a) the Accumulated Value on the Valuation Date that the Company receives
proof of death, increased by any positive Market Value Adjustment; or

(b) gross payments compounded daily at an effective annual yield of 5%,
starting on the date each payment is applied, decreased proportionately
to reflect withdrawals (in Hawaii and New York the 5% compounding is not
available; therefore (b) equals gross payments decreased proportionately
to reflect withdrawals); or

(c) the highest Accumulated Value on any prior Contract anniversary,
increased for any positive Market Value Adjustment and subsequent
payments and decreased proportionately for subsequent withdrawals.

A snapshot is taken of the current (a) value and compared to snapshots taken of
the (a) value on all prior Contract anniversaries, AFTER all of the (a) values
have been adjusted to reflect subsequent payments and decreased proportionately
for subsequent withdrawals. Proportionate reductions are calculated in the same
manner as described above for the standard death benefit. The (c) value is
determined on each Contract anniversary. The highest of all of these adjusted
(a) values then becomes the (c) value. This (c) value becomes the floor below
which the death benefit will not drop and is locked-in until the next Contract
anniversary. The values of (b) and (c) will be decreased proportionately if
withdrawals are taken.

II. If an Owner (or an Annuitant if the Owner is a nonnatural person) dies
before the Annuity Date but on or after the oldest Owner's 90th birthday, the
death benefit will equal the GREATER of:

(a) the Accumulated Value on the Valuation Date that the Company receives
proof of death, increased by any positive Market Value Adjustment; or

(b) the death benefit, as calculated under I above, that would have been
payable on the Contract anniversary immediately prior to the oldest
Owner's 90th birthday, increased for subsequent payments and decreased
proportionately for subsequent withdrawals.

A separate charge for the Enhanced Death Benefit Rider, equal to 1/12th of an
annual rate of 0.25%, is made against the Contract's Accumulated Value on the
last day of each month within which the Rider has been in effect and, if
applicable, on the date the Rider is terminated. The charge is made through a
pro-rata reduction (based on relative values) of Accumulation Units in the
Sub-Accounts, of dollar amounts in the Fixed Account, and of dollar amounts in
the Guarantee Period Accounts.

PAYMENT OF THE DEATH BENEFIT. The death benefit generally will be paid to the
beneficiary in one sum within seven business days of the receipt of due proof of
death at the Principal Office unless the Owner has specified a death benefit
annuity option. Instead of payment in one sum, the beneficiary may, by written
request, elect to:

(1) defer distribution of the death benefit for a period no more than five
years from the date of death; or

(2) receive distributions over the life of the beneficiary or for a period
certain not extending beyond the beneficiary's life expectancy, with
annuity benefit payments beginning one year from the date of death.

If distribution of the death benefit is deferred under (1) or (2), any value in
the Guarantee Period Accounts will be transferred to the Sub-Account investing
in the Money Market Fund. The excess, if any, of the death benefit over the
Accumulated Value also will be transferred to the Sub-Account investing in the
Money Market Fund.

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<PAGE>
The beneficiary may, by written request, effect transfers and withdrawals during
the deferral period and prior to annuitization under (2), but may not make
additional payments. The death benefit will reflect any earnings or losses
experienced during the deferral period. If there are multiple beneficiaries, the
consent of all is required.

With respect to the death benefit, the Accumulated Value under the Contract will
be based on the unit values next computed after due proof of the death has been
received.

H. THE SPOUSE OF THE OWNER AS BENEFICIARY

The Owner's spouse, if named as the sole beneficiary, may by written request
continue the Contract rather than receiving payment of the death benefit. The
spouse will then become the Owner and Annuitant subject to the following:
(1) any value in the Guarantee Period Accounts will be transferred to the
Sub-Account investing in the Money Market Fund; (2) the excess, if any, of the
death benefit over the Contract's Accumulated Value also will be transferred to
the Sub-Account investing in the Money Market Fund. The new Owner may make
additional payments. All other rights and benefits provided in the Contract will
continue, except that any subsequent spouse of such new Owner will not be
entitled to continue the Contract when the new Owner dies.

I. ASSIGNMENT

The Contract, other than one sold in connection with certain qualified plans,
may be assigned by the Owner at any time prior to the Annuity Date and prior to
the death of an Owner (see FEDERAL TAX CONSIDERATIONS). The Company will not be
deemed to have knowledge of an assignment unless it is made in writing and filed
at the Principal Office. The Company will not assume responsibility for
determining the validity of any assignment. If an assignment of the Contract is
in effect on the Annuity Date, the Company reserves the right to pay to the
assignee, in one sum, that portion of the Surrender Value of the Contract to
which the assignee appears to be entitled. The Company will pay the balance, if
any, in one sum to the Owner in full settlement of all liability under the
Contract. The interest of the Owner and of any beneficiary will be subject to
any assignment.

J. ELECTING THE FORM OF ANNUITY AND THE ANNUITY DATE

The Owner selects the Annuity Date. To the extent permitted by law, the Annuity
Date may be the first day of any month (1) before the Owner's 85th birthday, if
the Owner's age on the issue date of the Contract is 75 or under; or (2) within
ten years from the issue date of the Contract and before the Owner's 90th
birthday, if the Owner's age on the issue date is between 76 and 90. The Owner
may elect to change the Annuity Date by sending a request to the Principal
Office at least one month before the Annuity Date. To the extent permitted by
law, the new Annuity Date must be the first day of any month occurring before
the Owner's 99th birthday. In no event will the latest possible annuitization
age exceed 99. If there are Joint Owners, the age of the younger will determine
the Annuity Date. The Internal Revenue Code ("the Code") and the terms of
qualified plans impose limitations on the age at which annuity benefit payments
may commence and the type of annuity option selected. See FEDERAL TAX
CONSIDERATIONS for further information.

Subject to certain restrictions described below, the Owner has the right (1) to
select the annuity option under which annuity benefit payments are to be made,
and (2) to determine whether payments are to be made on a fixed basis, a
variable basis, or a combination fixed and variable basis. Certain annuity
options may be commutable or noncommutable. A commutable option provides the
Owner with the right to request a lump sum payment of any remaining balance
after annuity benefit payments have commenced. Under a noncommutable option, the
Owner may not request a lump sum payment. Annuity benefit payments are
determined according to the annuity tables in the Contract, by the annuity
option selected, and by the investment performance of the account(s) selected.
See "Annuity Benefit Payments" in the SAI.

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<PAGE>
To the extent a fixed annuity benefit payment option is selected, Accumulated
Value will be transferred to the Fixed Account of the Company, and the annuity
benefit payments will be fixed in amount. See APPENDIX A -- MORE INFORMATION
ABOUT THE FIXED ACCOUNT.

Under a variable annuity payout option, a payment to the Owner, or the payee the
Owner designates, equal to the value of the fixed number of Annuity Units in the
Sub-Account(s) is made monthly, quarterly, semi-annually or annually. Since the
value of an Annuity Unit in a Sub-Account will reflect the investment
performance of the Sub-Account, the amount of each annuity benefit payment will
vary.

The annuity option selected must produce an initial payment of at least $50 (a
lower amount may be required in some states). The Company reserves the right to
increase this minimum amount. If the annuity option(s) selected do(es) not
produce an initial payment which meet this minimum, a single payment may be
made. Once the Company begins making annuity benefit payments, the Owner cannot
make withdrawals or surrender the annuity benefit, except where the Owner has
elected a commutable period certain option. Beneficiaries entitled to receive
remaining payments under either a commutable or noncommutable "period certain"
option may elect instead to receive a lump sum settlement. See "K. Description
of Variable Annuity Payout Options" below.

If the Owner does not elect an option, a variable life annuity with periodic
payments guaranteed for ten years will be purchased. Changes in either the
Annuity Date or annuity option can be made up to one month prior to the Annuity
Date.

If the owner of a fixed annuity contract issued by the Company wishes to elect a
variable annuity option after annuitization, the Company may permit such owner
to exchange the fixed contract for a Contract offered in this Prospectus. The
proceeds of the fixed contract will be applied towards the variable annuity
option desired by the owner. The number of Annuity Units under the option will
be calculated using the Annuity Unit values as of the 15th of the month
preceding the Annuity Date.

If the Owner exercises the Minimum Guaranteed Annuity Payout (M-GAP) Rider,
annuity benefit payments must be made under a fixed annuity payout option
involving a life contingency and will be determined based on the Company's
guaranteed fixed annuity option rates listed under the Annuity Tables in the
Contract.

K. DESCRIPTION OF VARIABLE ANNUITY PAYOUT OPTIONS

The Company provides the variable annuity payout options described below.
Currently, variable annuity payout options may be funded through the
Sub-Accounts investing in the Select Growth and Income Fund, the Select Income
Fund, the Select Growth Fund and the Money Market Fund.

The Company currently also provides these same options funded through the Fixed
Account (fixed-amount annuity payout option). Regardless of how payments were
allocated during the accumulation period, any of the variable annuity options or
the fixed-amount options may be selected, or any of the variable annuity options
may be selected in combination with any of the fixed-amount annuity options.
Other annuity options may be offered by the Company. IRS regulations may not
permit certain of the available annuity options when used in connection with
certain qualified Contracts.

If the Owner (or, if there are Joint Owners, the surviving Joint Owner) dies on
or after the Annuity Date, the beneficiary will become the Owner of the contract
and any remaining annuity benefit payments will continue to the beneficiary in
accordance with the terms of the annuity benefit payment option selected prior
to the Annuity Date. If there are Joint Owners on or after the Annuity Date,
upon the first Owner death, any remaining annuity benefit payments will continue
to the surviving Joint Owner in accordance with the terms of the annuity benefit
payment option selected prior to the Annuity Date.

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<PAGE>
If the Owner selects an annuity payout option which provides for the
continuation of payments after the death of an Annuitant, upon the death of an
Annuitant on or after the Annuity Date, any remaining payments will continue to
be paid to the Owner or the payee the Owner has designated.

VARIABLE LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR TEN YEARS -- This variable
annuity is payable periodically during the lifetime of the Annuitant with the
guarantee that if the Annuitant should die before the guaranteed number of
payments have been made, the remaining guaranteed payments will continue to be
paid.

VARIABLE LIFE ANNUITY PAYABLE PERIODICALLY DURING LIFETIME OF THE ANNUITANT
ONLY -- This variable annuity is payable during the Annuitant's life. It would
be possible under this option for the Owner to receive only one annuity benefit
payment if the Annuitant dies prior to the due date of the second annuity
benefit payment, two annuity benefit payments if the Annuitant dies before the
due date of the third annuity benefit payment, and so on. Payments will
continue, however, during the lifetime of the Annuitant, no matter how long he
or she lives.

UNIT REFUND VARIABLE LIFE ANNUITY -- This is an annuity payable periodically
during the lifetime of the Annuitant with the guarantee that if the Annuitant
dies and (1) exceeds (2), then periodic variable annuity benefit payments will
continue until the number of such payments equals the number determined in (1).

Where: (1) is the dollar amount of the Accumulated Value at
annuitization divided by the dollar amount of the first
payment, and

(2) is the number of payments paid prior to the death of the
Annuitant.

JOINT AND SURVIVOR VARIABLE LIFE ANNUITY -- This variable annuity is payable
during the joint lifetime of the Annuitant and another individual (i.e. the
beneficiary or a Joint Annuitant), and then continues thereafter during the
lifetime of the survivor. The amount of each payment during the lifetime of the
survivor is based on the same number of Annuity Units which applied during the
joint lifetime of the two payees. There is no minimum number of payments under
this option.

JOINT AND TWO-THIRDS SURVIVOR VARIABLE LIFE ANNUITY -- This variable annuity is
payable during the joint lifetime of the Annuitant and one other individual
(i.e. the beneficiary or a Joint Annuitant), and then continues thereafter
during the lifetime of the survivor. The amount of each periodic payment during
the lifetime of the survivor, however, is based upon two-thirds of the number of
Annuity Units which applied during their joint lifetimes. There is no minimum
number of payments under this option.

PERIOD CERTAIN VARIABLE ANNUITY -- This variable annuity has periodic payments
for a stipulated number of years ranging from one to thirty. If the Annuitant
dies before the end of the period, remaining payments will continue to be paid.
A fixed period certain annuity may be either commutable or noncommutable. A
variable period certain annuity is automatically commutable.

It should be noted that the period certain option does not involve a life
contingency. In computing payments under this option, the Company deducts a
charge for annuity rate guarantees, which includes a factor for mortality risks.
Although not contractually required to do so, the Company currently follows a
practice of permitting persons receiving payments under a period certain option
to elect to convert to a variable annuity involving a life contingency. The
Company may discontinue or change this practice at any time, but not with
respect to election of the option made prior to the date of any change in this
practice.

L. ANNUITY BENEFIT PAYMENTS

DETERMINATION OF THE FIRST VARIABLE ANNUITY BENEFIT PAYMENT. The amount of the
first monthly payment depends upon the selected variable annuity option, the sex
(however, see "N. NORRIS Decision" below) and age of the Annuitant, and the
value of the amount applied under the annuity option ("annuity value"). The
Contract provides annuity rates that determine the dollar amount of the first
periodic payment under each

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variable annuity option for each $1,000 of applied value. From time to time, the
Company may offer its Owners both fixed and variable annuity rates more
favorable than those contained in the Contract. Any such rates will be applied
uniformly to all Owners of the same class.

For all options except a death benefit annuity the dollar amount of the first
periodic annuity benefit payment is determined by multiplying (1) the
Accumulated Value applied under that option (after application of any Market
Value Adjustment and less premium tax, if any) divided by $1,000, by (2) the
applicable amount of the first monthly payment per $1,000 of value. For a death
benefit annuity, the annuity value is the amount of the death benefit.

The first periodic annuity benefit payment is based upon the Accumulated Value
as of a date not more than four weeks preceding the date that the first annuity
benefit payment is due. The Company transmits variable annuity benefit payments
for receipt by the payee by the first of a month. Variable annuity benefit
payments are currently based on unit values as of the 15th day of the preceding
month.

THE ANNUITY UNIT. On and after the Annuity Date, the Annuity Unit is a measure
of the value of the monthly annuity benefit payments under a variable annuity
option. The value of an Annuity Unit in each Sub-Account initially was set at
$1.00. The value of an Annuity Unit under a Sub-Account on any Valuation Date
thereafter is equal to the value of such unit on the immediately preceding
Valuation Date, multiplied by the net investment factor of the Sub-Account for
the current Valuation Period and divided by the assumed interest rate for the
current Valuation Period The assumed interest rate, discussed below, is
incorporated in the variable annuity options offered in the Contract.

DETERMINATION OF THE NUMBER OF ANNUITY UNITS. The dollar amount of the first
variable annuity benefit payment is divided by the value of an Annuity Unit of
the selected Sub-Account(s) to determine the number of Annuity Units represented
by the first payment. This number of Annuity Units remains fixed under all
annuity options except the joint and two-thirds survivor annuity option.

DOLLAR AMOUNT OF SUBSEQUENT VARIABLE ANNUITY BENEFIT PAYMENTS. The dollar
amount of each periodic variable annuity benefit payment after the first will
vary with the value of the Annuity Units of the selected Sub-Account(s). The
dollar amount of each subsequent variable annuity benefit payment is determined
by multiplying the fixed number of Annuity Units (derived from the dollar amount
of the first payment, as described above) with respect to a Sub-Account by the
value of an Annuity Unit of that Sub-Account on the applicable Valuation Date.

The variable annuity options offered by the Company are based on a 3.5% assumed
interest rate, which affects the amounts of the variable annuity benefit
payments. Variable annuity benefit payments with respect to a Sub-Account will
increase over periods when the actual net investment result of the Sub-Account
exceeds the equivalent of the assumed interest rate. Variable annuity benefit
payments will decrease over periods when the actual net investment results are
less than the equivalent of the assumed interest rate.

For an illustration of a calculation of a variable annuity benefit payment using
a hypothetical example, see "Annuity Benefit Payments" in the SAI.

If the Owner elects the Minimum Guaranteed Annuity Payout (M-GAP) Rider, at
annuitization the annuity benefit payments provided under the Rider (calculated
by applying the Company's guaranteed fixed annuity factors to the Minimum
Guaranteed Annuity Payout Benefit Base), are compared to the payments that would
otherwise be available. If annuity benefit payments under the Rider are higher,
the Owner may exercise the Rider, provided the conditions of the Rider have been
met. If annuity benefit payments under the Rider are

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<PAGE>
lower, the Owner may choose not to exercise the Rider and instead annuitize
under the then current annuity factors. See "M. Optional Minimum Guaranteed
Annuity Payout (M-GAP) Rider," below.

M. OPTIONAL MINIMUM GUARANTEED ANNUITY PAYOUT (M-GAP) RIDER

Subject to state availability, an optional Minimum Guaranteed Annuity Payout
(M-GAP) Rider is currently available for a separate monthly charge. The M-GAP
Rider guarantees a minimum amount of fixed lifetime income during the annuity
payout phase, subject to the conditions described below. On each Contract
anniversary a Minimum Guaranteed Annuity Payout Benefit Base is determined. The
Minimum Guaranteed Annuity Payout Benefit Base (less any applicable premium
taxes) is the value that will be annuitized if the Rider is exercised. In order
to exercise the Rider, a fixed annuitization option involving a life contingency
must be selected. Annuitization under this Rider will occur at the Company's
guaranteed fixed annuity option rates listed under the Annuity Option Tables in
the Contract. The Minimum Guaranteed Annuity Payout Benefit Base is equal to the
greatest of:

(a) the Accumulated Value increased by any positive Market Value Adjustment,
if applicable, on the Contract anniversary that the M-GAP Benefit Base is
being determined;

(b) the Accumulated Value on the effective date of the Rider compounded
daily at an effective annual yield of 5% plus gross payments made
thereafter compounded daily at an effective annual yield of 5%, starting
on the date each payment is applied, proportionately reduced to reflect
withdrawals; or

(c) the highest Accumulated Value on any prior Contract anniversary since
the Rider effective date as determined after being increased for
subsequent payments and any positive Market Value Adjustment, if
applicable, and proportionately reduced for subsequent withdrawals.

For each withdrawal described in (b) and (c) above, the proportionate reduction
is calculated by multiplying the (b) or (c) value, whichever is applicable,
determined immediately prior to the withdrawal by the following fraction:

amount of the withdrawal
----------------------------------------------------------
Accumulated Value determined immediately prior to the withdrawal

CONDITIONS ON ELECTING THE M-GAP RIDER.

- The Owner may elect the M-GAP Rider at Contract issue or at any time
thereafter, however, if the Rider is not elected within thirty days after
Contract issue or within thirty days after a Contract anniversary date,
the effective date of the Rider will be the following Contract anniversary
date.

- The Owner may not elect a Rider with a ten-year waiting period if at the
time of election the Owner has reached his/her 87th birthday. The Owner
may not elect a Rider with a fifteen-year waiting period if at the time of
election the Owner has reached his/her 82nd birthday.

EXERCISING THE M-GAP RIDER.

- The Owner may only exercise the M-GAP Rider within thirty days after any
Contract anniversary following the expiration of a ten or fifteen-year
waiting period from the effective date of the Rider.

- The Owner may only annuitize under a fixed annuity payout option involving
a life contingency as provided under "K. Description of Variable Annuity
Payout Options."

- The Owner may only annuitize at the Company's guaranteed fixed annuity
option rates listed under the Annuity Option Tables in the Contract.

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<PAGE>
TERMINATING THE M-GAP RIDER.

- The Owner may not terminate the M-GAP Rider prior to the seventh Contract
anniversary after the effective date of the Rider, unless such termination
(1) occurs on or within thirty days after any contract anniversary and
(2) in conjunction with the repurchase of an M-GAP Rider with a waiting
period of equal or greater length at its then current price, if available.

- The Owner may terminate the Rider at any time after the seventh Contract
anniversary following the effective date of the Rider.

- The Owner may repurchase a Rider with a waiting period equal to or greater
than the Rider then in force at the new Rider's then current price, if
available, however, repurchase may only occur on or within thirty days of
a Contract anniversary.

- Other than in the event of a repurchase, once terminated the Rider may not
be purchased again.

- The Rider will terminate upon surrender of the Contract or the date that a
death benefit is payable if the Contract is not continued under "H. The
Spouse of the Owner as Beneficiary" (see DESCRIPTION OF THE CONTRACT).

From time to time the Company may illustrate minimum guaranteed income amounts
under the M-GAP Rider for individuals based on a variety of assumptions,
including varying rates of return on the value of the Contract during the
accumulation phase, annuity payout periods, annuity payout options and M-GAP
Rider waiting periods. Any assumed rates of return are for purposes of
illustration only and are not intended as a representation of past or future
investment rates of return.

For example, the illustration below assumes an initial payment of $100,000 for
an Owner age 60 (at issue) and exercise of an M-GAP Rider with a ten-year
waiting period. The illustration assumes that no subsequent payments or
withdrawals are made and that the annuity payout option is a Life Annuity With
Payments Guaranteed For 10 Years. The values below have been computed based on a
5% rate of return and are the guaranteed minimums that would be received under
the M-GAP Rider. The minimum guaranteed benefit base amounts are the values that
will be annuitized. Minimum guaranteed annual income values are based on a fixed
annuity payout.

<TABLE>
<CAPTION>
MINIMUM
CONTRACT MINIMUM GUARANTEED
ANNIVERSARY GUARANTEED ANNUAL
AT EXERCISE BENEFIT BASE INCOME(1)
- ----------- ------------ ----------
<S> <C> <C>
10 $162,889 $12,153
15 $207,892 $17,695
</TABLE>

(1)Other fixed annuity options involving a life contingency other than Life
Annuity With Payments Guaranteed for 10 Years are available. See "K. Description
of Variable Annuity Payout Options."

The M-GAP Rider does not create Accumulated Value or guarantee performance of
any investment option. Because this Rider is based on guaranteed actuarial
factors, the level of lifetime income that it guarantees may often be less than
the level that would be provided by applying the then current annuity factors.
Therefore, the Rider should be regarded as providing a guarantee of a minimum
amount of annuity income. As described above, withdrawals will reduce the
benefit base. The Company reserves the right to terminate the availability of
the M-GAP Rider at any time. Such a termination would not effect M-GAP Riders
issued prior to the termination date, but as noted above, Owners would not be
able to repurchase a new Rider under the repurchase feature (see above,
"TERMINATING THE M-GAP RIDER.")

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<PAGE>
N. NORRIS DECISION

In the case of ARIZONA GOVERNING COMMITTEE V. NORRIS, the United States Supreme
Court ruled that, in connection with retirement benefit options offered under
certain employer-sponsored employee benefit plans, annuity options based on
sex-distinct actuarial tables are not permissible under Title VII of the Civil
Rights Act of 1964. The ruling requires that benefits derived from contributions
paid into a plan after August 1, 1983 be calculated without regard to the sex of
the employee. Annuity benefits attributable to payments received by the Company
under a Contract issued in connection with an employer-sponsored benefit plan
affected by the NORRIS decision will be based on the greater of (1) the
Company's unisex Non-Guaranteed Current Annuity Option Rates or (2) the
guaranteed unisex rates described in such Contract, regardless of whether the
Annuitant is male or female.

O. COMPUTATION OF VALUES

THE ACCUMULATION UNIT. Each net payment is allocated to the investment options
selected by the Owner. Allocations to the Sub-Accounts are credited to the
Contract in the form of Accumulation Units. Accumulation Units are credited
separately for each Sub-Account. The number of Accumulation Units of each Sub-
Account credited to the Contract is equal to the portion of the net payment
allocated to the Sub-Account, divided by the dollar value of the applicable
Accumulation Unit as of the Valuation Date the payment is received at the
Principal Office. The number of Accumulation Units resulting from each payment
will remain fixed unless changed by a subsequent split of Accumulation Unit
value, a transfer, a withdrawal, or surrender. The dollar value of an
Accumulation Unit of each Sub-Account varies from Valuation Date to Valuation
Date based on the investment experience of that Sub-Account, and will reflect
the investment performance, expenses and charges of its Underlying Funds. The
value of an Accumulation Unit at inception was set at $1.00 on the first
Valuation Date for each Sub-Account.

Allocations to the Guarantee Period Accounts and the Fixed Account are not
converted into Accumulation Units but are credited interest at a rate
periodically set by the Company. See APPENDIX A -- MORE INFORMATION ABOUT THE
FIXED ACCOUNT and GUARANTEE PERIOD ACCOUNTS.

The Accumulated Value under the Contract is determined by (1) multiplying the
number of Accumulation Units in each Sub-Account by the value of an Accumulation
Unit of that Sub-Account on the Valuation Date, (2) adding the products, and (3)
adding the amount of the accumulations in the Fixed Account and Guarantee Period
Accounts, if any.

NET INVESTMENT FACTOR. The Net Investment Factor is an index that measures the
investment performance of a Sub-Account from one Valuation Period to the next.
This factor is equal to 1.000000 plus the result from dividing (1) by (2) and
subtracting (3) and (4) where:

(1) is the investment income of a Sub-Account for the Valuation Period,
including realized or unrealized capital gains and losses during the
Valuation Period, adjusted for provisions made for taxes, if any;

(2) is the value of that Sub-Account's assets at the beginning of the Valuation
Period;

(3) is a charge for mortality and expense risks equal to 1.25% on an annual
basis of the daily value of the Sub-Account's assets; and

(4) is an administrative charge equal to 0.15% on an annual basis of the daily
value of the Sub-Account's assets.

The dollar value of an Accumulation Unit as of a given Valuation Date is
determined by multiplying the dollar value of the corresponding Accumulation
Unit as of the immediately preceding Valuation Date by the appropriate net
investment factor.

For an illustration of an Accumulation Unit calculation using a hypothetical
example see the SAI.

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<PAGE>
CHARGES AND DEDUCTIONS

Deductions under the Contract and charges against the assets of the Sub-Accounts
are described below. Other deductions and expenses paid out of the assets of the
Underlying Funds are described in the prospectuses and SAIs of the Underlying
Funds.

A. VARIABLE ACCOUNT DEDUCTIONS

MORTALITY AND EXPENSE RISK CHARGE. The Company assesses a charge against the
assets of each Sub-Account to compensate for certain mortality and expense risks
it has assumed. The charge is imposed during both the accumulation phase and the
annuity payout phase. The mortality risk arises from the Company's guarantee
that it will make annuity benefit payments in accordance with annuity rate
provisions established at the time the Contract is issued for the life of the
Annuitant (or in accordance with the annuity payout option selected), no matter
how long the Annuitant (or other individual) lives and no matter how long all
Annuitants as a class live. Therefore, the mortality charge is deducted during
the annuity payout phase on all Contracts, including those that do not involve a
life contingency, even though the Company does not bear direct mortality risk
with respect to variable annuity settlement options that do not involve life
contingencies. The expense risk arises from the Company's guarantee that the
charges it makes will not exceed the limits described in the Contract and in
this Prospectus.

If the charge for mortality and expense risks is not sufficient to cover actual
mortality experience and expenses, the Company will absorb the losses. If
expenses are less than the amounts provided to the Company by the charge, the
difference will be a profit to the Company. To the extent this charge results in
a profit to the Company, such profit will be available for use by the Company
for, among other things, the payment of distribution, sales and other expenses.

The mortality and expense risk charge is assessed daily at an annual rate of
1.25% of each Sub-Account's assets. This charge may not be increased. Since
mortality and expense risks involve future contingencies which are not subject
to precise determination in advance, it is not feasible to identify specifically
the portion of the charge which is applicable to each. The Company intends to
recoup commissions and other sales expenses through profits from the Company's
General Account, which may include amounts derived from mortality and expense
risk charges.

ADMINISTRATIVE EXPENSE CHARGE. The Company assesses each Sub-Account with a
daily charge at an annual rate of 0.15% of the average daily net assets of the
Sub-Account. This charge may not be increased. The charge is imposed during both
the accumulation phase and the annuity payout phase. The daily Administrative
Expense Charge is assessed to help defray administrative expenses actually
incurred in the administration of the Sub-Account, without profits. There is no
direct relationship, however, between the amount of administrative expenses
imposed on a given Contract and the amount of expenses actually attributable to
that Contract.

Deductions for the Contract fee (see "B. Contract Fee" below) and for the
Administrative Expense Charge are designed to reimburse the Company for the cost
of administration and related expenses and are not expected to be a source of
profit. The administrative functions and expense assumed by the Company in
connection with the Variable Account and the Contract include, but are not
limited to, clerical, accounting, actuarial and legal services, rent, postage,
telephone, office equipment and supplies, expenses of preparing and printing
registration statements, expense of preparing and typesetting prospectuses and
the cost of printing prospectuses not allocable to sales expense, filing and
other fees.

OTHER CHARGES. Because the Sub-Accounts purchase shares of the Underlying
Funds, the value of the net assets of the Sub-Accounts will reflect the
investment advisory fee and other expenses incurred by the Underlying Funds. The
prospectuses and SAIs of the Underlying Funds contain additional information
concerning expenses of the Underlying Funds.

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B. CONTRACT FEE

A $35 Contract fee currently is deducted on the Contract anniversary and upon
full surrender of the Contract if the Accumulated Value on any of these dates is
less than $75,000. (This fee may vary by state. See your Contract for more
information.) Where Contract value has been allocated to more than one account,
a percentage of the total Contract fee will be deducted from the value in each
account. The portion of the charge deducted from each account will be equal to
the percentage which the value in that account bears to the Accumulated Value
under the Contract. The deduction of the Contract fee from a Sub-Account will
result in cancellation of a number of Accumulation Units equal in value to the
percentage of the charge deducted from that account.

Where permitted by law, the Contract fee may be waived for Contracts where, on
the issue date, either the Owner or the Annuitant is within the following class
of individuals: employees and registered representatives of any broker-dealer
which has entered into a sales agreement with the Company to sell the Contract;
employees of the Company, its affiliates and subsidiaries; officers, directors,
trustees and employees of any of the Underlying Funds; investment managers or
sub-advisers of any of the Underlying Funds; and the spouses of and immediate
family members residing in the same household with such eligible persons.
"Immediate family members" means children, siblings, parents and grandparents.

C. OPTIONAL BENEFIT RIDER CHARGES

Subject to state availability, the Company currently offers optional benefit
riders that may be elected by the Owner. A separate monthly charge is made for
each rider selected. The charge is made through a pro-rata reduction of the
Accumulated Value of the Sub-Accounts, the Fixed Account and the Guarantee
Period Accounts (based on the relative value that the Accumulation Units of the
Sub-Accounts, the dollar amounts in the Fixed Account and the dollar amounts in
the Guarantee Period Accounts bear to the total Accumulated Value).

The applicable charge is assessed on the Accumulated Value on the last day of
each month within which the Rider has been effect and, if applicable, on the
date the rider is terminated, multiplied by 1/12th of the following annual
percentage rates:

<TABLE>
<S> <C>
Minimum Guaranteed Annuity Payout (M-GAP) Rider with
ten-year waiting period................................... 0.25%
Minimum Guaranteed Annuity Payout (M-GAP) Rider with
fifteen-year waiting period............................... 0.15%
Enhanced Death Benefit Rider................................ 0.25%
</TABLE>

For a description of the Enhanced Death Benefit Rider, see "G. Death Benefit"
and for a description of the Minimum Guaranteed Annuity Payout (M-GAP) Rider,
see "M. Optional Minimum Guaranteed Annuity Payout (M-GAP) Rider," under
DESCRIPTION OF THE CONTRACT above.

D. PREMIUM TAXES

Some states and municipalities impose a premium tax on variable annuity
contracts. State premium taxes currently range up to 3.5%.

The Company makes a charge for state and municipal premium taxes, when
applicable, and deducts the amount paid as a premium tax charge. The current
practice of the Company is to deduct the premium tax charge in one of two ways:

1. if the premium tax was paid by the Company when payments were received,
the premium tax charge is deducted on a pro-rata basis when withdrawals
are made, upon surrender of the Contract, or when

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<PAGE>
annuity benefit payments begin (the Company reserves the right instead to
deduct the premium tax charge for a Contract at the time payments are
received); or

2. the premium tax charge is deducted in total when annuity benefit
payments begin.

In no event will a deduction be taken before the Company has incurred a tax
liability under applicable state law.

If no amount for premium tax was deducted at the time the payment was received,
but subsequently tax is determined to be due prior to the Annuity Date, the
Company reserves the right to deduct the premium tax from the Contract value at
the time such determination is made.

E. TRANSFER CHARGE

The Company currently makes no charge for processing transfers. The Company
guarantees that the first 12 transfers in a Contract year will be free of
transfer charge, but reserves the right to assess a charge, guaranteed never to
exceed $25, for each subsequent transfer in a Contract year to reimburse it for
the expense of processing transfers. For more information, see "D. Transfer
Privilege" under DESCRIPTION OF THE CONTRACT.

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<PAGE>
GUARANTEE PERIOD ACCOUNTS

Due to certain exemptive and exclusionary provisions in the securities laws,
interests in the Guarantee Period Accounts and the Company's Fixed Account are
not registered as an investment company under the provisions of the 1933 Act or
the 1940 Act. Accordingly, the staff of the SEC has not reviewed the disclosures
in this Prospectus relating to the Guarantee Period Accounts or the Fixed
Account. Nevertheless, disclosures regarding the Guarantee Period Accounts and
the Fixed Account of this Contract or any fixed benefits offered under these
accounts may be subject to the provisions of the 1933 Act relating to the
accuracy and completeness of statements made in the Prospectus.

INVESTMENT OPTIONS. In most jurisdictions, Guarantee Periods ranging from three
through ten years may be available. Each Guarantee Period established for the
Owner is accounted for separately in a non-unitized segregated account, except
in California where it is accounted for in the Company's General Account. Each
Guarantee Period Account provides for the accumulation of interest at a
Guaranteed Interest Rate. The Guaranteed Interest Rate on amounts allocated or
transferred to a Guarantee Period Account is determined from time to time by the
Company in accordance with market conditions. Once an interest rate is in effect
for a Guarantee Period Account, however, the Company may not change it during
the duration of its Guarantee Period. In no event will the Guaranteed Interest
Rate be less than 3%.

To the extent permitted by law, the Company reserves the right at any time to
offer Guarantee Periods with durations that differ from those which were
available when a Contract initially was issued and to stop accepting new
allocations, transfers or renewals to a particular Guarantee Period.

Owners may allocate net payments or make transfers from any of the Sub-Accounts,
the Fixed Account or an existing Guarantee Period Account to establish a new
Guarantee Period Account at any time prior to the Annuity Date. Transfers from a
Guarantee Period Account on any date other than on the day following the
expiration of that Guarantee Period will be subject to a Market Value
Adjustment. The Company establishes a separate investment account each time the
Owner allocates or transfers amounts to a Guarantee Period except that amounts
allocated to the same Guarantee Period on the same day will be treated as one
Guarantee Period Account. The minimum that may be allocated to establish a
Guarantee Period Account is $1,000. If less than $1,000 is allocated, the
Company reserves the right to apply that amount to the Money Market Fund. The
Owner may allocate amounts to any of the Guarantee Periods available.

At least 45 days, but not more than 75 days, prior to the end of a Guarantee
Period, the Company will notify the Owner in writing of the expiration of that
Guarantee Period. At the end of a Guarantee Period the Owner may transfer
amounts to the Sub-Accounts, the Fixed Account or establish a new Guarantee
Period Account of any duration then offered by the Company without a Market
Value Adjustment. If reallocation instructions are not received at the Principal
Office before the end of a Guarantee Period, the account value automatically
will be applied to a new Guarantee Period Account with the same duration unless
(1) less than $1,000 would remain in the Guarantee Period Account on its
expiration date, or (2) the Guarantee Period would extend beyond the Annuity
Date or is no longer available. In such cases, the Guarantee Period Account
value will be transferred to the Sub-Account investing in the Money Market Fund.
Where amounts have been renewed automatically in a new Guarantee Period, the
Company currently gives the Owner an additional 30 days to transfer out of the
Guarantee Period Account without application of a Market Value Adjustment. This
practice may be discontinued or changed with notice at the Company's discretion.
Under contracts issued in New York, the Company guarantees that it will transfer
monies out of the Guarantee Period Account without application of a Market Value
Adjustment if the Owner's request is received within ten days of the renewal
date.

MARKET VALUE ADJUSTMENT. No Market Value Adjustment will be applied to
transfers, withdrawals, or a surrender from a Guarantee Period Account on the
expiration of its Guarantee Period. In addition, no negative Market Value
Adjustment will be applied to a death benefit. However, a positive Market Value
Adjustment, if any, will be applied to increase the value of the death benefit
when based on the Contract's Accumulated Value. See "G. Death Benefit." All
other transfers, withdrawals, or a surrender prior to the end of a Guarantee

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<PAGE>

Period will be subject to a Market Value Adjustment, which may increase or
decrease the account value. Amounts applied under an annuity option are treated
as withdrawals when calculating the Market Value Adjustment. The Market Value
Adjustment will be determined by multiplying the amount taken from each
Guarantee Period Account by the market value factor. The market value factor for
each Guarantee Period Account is equal to:

[(1+i)/(1+j)] TO THE POWER OF n/365 - 1

where: i is the Guaranteed Interest Rate expressed as a decimal for
example: (3% = 0.03) being credited to the current Guarantee
Period;

j is the new Guaranteed Interest Rate, expressed as a decimal,
for a Guarantee Period with a duration equal to the number of
years remaining in the current Guarantee Period, rounded to
the next higher number of whole years. If that rate is not
available, the Company will use a suitable rate or index
allowed by the Department of Insurance; and

n is the number of days remaining from the Valuation Date to the
end of the current Guarantee Period.

Based on the application of this formula, the value of a Guarantee Period
Account will increase after the Market Value Adjustment is applied if the then
current market rates are lower than the rate being credited to the Guarantee
Period Account. Similarly, the value of a Guarantee Period Account will decrease
after the Market Value Adjustment is applied if the then current market rates
are higher than the rate being credited to the Guarantee Period Account. The
Market Value Adjustment is limited, however, so that even if the account value
is decreased after application of a Market Value Adjustment, it will equal or
exceed the Owner's principal plus 3% earnings per year less applicable Contract
fees. Conversely, if the then current market rates are lower and the account
value is increased after the Market Value Adjustment is applied, the increase in
value is also affected by the minimum guaranteed rate of 3% such that the amount
that will be added to the Guarantee Period Account is limited to the difference
between the amount earned and the 3% minimum guaranteed earnings. For examples
of how the Market Value Adjustment works, See APPENDIX D -- THE MARKET VALUE
ADJUSTMENT.

WITHDRAWALS. Prior to the Annuity Date, the Owner may make withdrawals of
amounts held in the Guarantee Period Accounts. Withdrawals from these accounts
will be made in the same manner and be subject to the same rules as set forth
under "F. Withdrawals" and "E. Surrender." In addition, the following provisions
also apply to withdrawals from a Guarantee Period Account: (1) a Market Value
Adjustment will apply to all withdrawals, unless made at the end of the
Guarantee Period; and (2) the Company reserves the right to defer payments of
amounts withdrawn from a Guarantee Period Account for up to six months from the
date it receives the withdrawal request. If deferred for 30 days or more, the
Company will pay interest on the amount deferred at a rate of at least 3%.

In the event that a Market Value Adjustment applies to a withdrawal of a portion
of the value of a Guarantee Period Account, it will be calculated on the amount
requested and deducted or added to the amount remaining in the Guarantee Period
Account. If the entire amount in a Guarantee Period Account is requested, the
adjustment will be made to the amount payable.

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<PAGE>
FEDERAL TAX CONSIDERATIONS

The effect of federal income taxes on the value of a Contract, on withdrawals or
surrenders, on annuity benefit payments, and on the economic benefit to the
Owner or beneficiary depends upon a variety of factors. The following discussion
is based upon the Company's understanding of current federal income tax laws as
they are interpreted as of the date of this Prospectus. No representation is
made regarding the likelihood of continuation of current federal income tax laws
or of current interpretations by the IRS. In addition, this discussion does not
address state or local tax consequences that may be associated with the
Contract.

IT SHOULD BE RECOGNIZED THAT THE FOLLOWING DISCUSSION OF FEDERAL INCOME TAX
ASPECTS OF AMOUNTS RECEIVED UNDER VARIABLE ANNUITY CONTRACTS IS NOT EXHAUSTIVE,
DOES NOT PURPORT TO COVER ALL SITUATIONS, AND IS NOT INTENDED AS TAX ADVICE. A
QUALIFIED TAX ADVISER ALWAYS SHOULD BE CONSULTED WITH REGARD TO THE APPLICATION
OF LAW TO INDIVIDUAL CIRCUMSTANCES.

A. GENERAL

THE COMPANY. The Company intends to make a charge for any effect which the
income, assets, or existence of the Contract, the Variable Account or the
Sub-Accounts may have upon its tax. The Variable Account presently is not
subject to tax, but the Company reserves the right to assess a charge for taxes
should the Variable Account at any time become subject to tax. Any charge for
taxes will be assessed on a fair and equitable basis in order to preserve equity
among classes of Owners and with respect to each separate account as though that
separate account were a separate taxable entity.

The Variable Account is considered a part of and taxed with the operations of
the Company. The Company is taxed as a life insurance company under Subchapter L
of the Code. The Company files a consolidated tax return with its affiliates.

DIVERSIFICATION REQUIREMENTS. The IRS has issued regulations under Section
817(h) of the Code relating to the diversification requirements for variable
annuity and variable life insurance contracts. The regulations prescribed by the
Treasury Department provide that the investments of a segregated asset account
underlying a variable annuity contract are adequately diversified if no more
than 55% of the value of its assets is represented by any one investment, no
more than 70% by any two investments, no more than 80% by any three investments,
and no more than 90% by any four investments. Under this section of the Code, if
the investments are not adequately diversified, the Contract will not be treated
as an annuity contract and therefore, the income on the Contract, for any
taxable year of the Owner, would be treated as ordinary income received or
accrued by the Owner. It is anticipated that the Underlying Funds will comply
with the current diversification requirements. In the event that future IRS
regulations and/or rulings would require Contract modifications in order to
remain in compliance with the diversification standards, the Company will make
reasonable efforts to comply, and it reserves the right to make such changes as
it deems appropriate for that purpose.

INVESTOR CONTROL. In order for a variable annuity contract to qualify for tax
deferral, the Company, and not the variable contract owner, must be considered
to be the owner for tax purposes of the assets in the segregated asset account
underlying the variable annuity contract. In certain circumstances, however,
variable annuity contract owners may now be considered the owners of these
assets for federal income tax purposes. Specifically, the IRS has stated in
published rulings that a variable annuity contract owner may be considered the
owner of segregated account assets if the contract owner possesses incidents of
ownership in those assets, such as the ability to exercise investment control
over the assets. The Treasury Department has also announced, in connection with
the issuance of regulations concerning investment diversification, that those
regulations do not provide guidance governing the circumstances in which
investor control of the investments of a segregated asset account may cause the
investor (i.e., the contract owner), rather than the insurance company, to be
treated as the owner of the assets in the account. This announcement also states
that guidance would be issued by way of regulations or rulings on the "extent to
which policyholders may direct their investments to particular sub-accounts
without being treated as owners of the underlying assets." As of the

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<PAGE>
date of this Prospectus, no such guidance has been issued. The Company,
therefore, additionally reserves the right to modify the Contract as necessary
in order to attempt to prevent a contract owner from being considered the owner
of a pro rata share of the assets of the segregated asset account underlying the
variable annuity contracts.

B. QUALIFIED AND NON-QUALIFIED CONTRACTS

From a federal tax viewpoint there are two types of variable annuity contracts,
"qualified" contracts and "non-qualified" contracts. A qualified contract is one
that is purchased in connection with a retirement plan which meets the
requirements of Sections 401, 403, or 408 of the Code, while a non-qualified
contract is one that is not purchased in connection with one of the indicated
retirement plans. The tax treatment for certain withdrawals or surrenders will
vary, depending on whether they are made from a qualified contract or a non-
qualified contract. For more information on the tax provisions applicable to
qualified contracts, see D below.

C. TAXATION OF THE CONTRACTS IN GENERAL

The Company believes that the Contracts described in this Prospectus will, with
certain exceptions (see "Nonnatural Owners" below), be considered annuity
contracts under Section 72 of the Code. Please note, however if the Owner
chooses an Annuity Date beyond the Annuitant's 85th birthday, it is possible
that the Contract may not be considered an annuity for tax purposes and
therefore the Owner may be taxed on the annual increase in Accumulated Value.
The Owner should consult tax and financial advisors for more information. This
section governs the taxation of annuities. The following discussion concerns
annuities subject to Section 72.

WITHDRAWALS PRIOR TO ANNUITIZATION. With certain exceptions, any increase in
the Contract's Accumulated Value is not taxable to the Owner until it is
withdrawn from the Contract. Under the current provisions of the Code, amounts
received under an annuity contract prior to annuitization (including payments
made upon the death of the annuitant or owner), generally are first attributable
to any investment gains credited to the contract over the taxpayer's "investment
in the contract." Such amounts will be treated as gross income subject to
federal income taxation. "Investment in the contract" is the total of all
payments to the Contract which were not excluded from the Owner's gross income
less any amounts previously withdrawn which were not included in income. Section
72(e)(11)(A)(ii) requires that all non-qualified deferred annuity contracts
issued by the same insurance company to the same owner during a single calendar
year be treated as one contract in determining taxable distributions.

ANNUITY PAYOUTS AFTER ANNUITIZATION. When annuity benefit payments are
commenced under the Contract, generally a portion of each payment may be
excluded from gross income. The excludable portion generally is determined by a
formula that establishes the ratio that the investment in the Contract bears to
the expected return under the Contract. The portion of the payment in excess of
this excludable amount is taxable as ordinary income. Once all the investment in
the Contract is recovered, the entire payment is taxable. If the annuitant dies
before cost basis is recovered, a deduction for the difference is allowed on the
annuitant's final tax return.

PENALTY ON DISTRIBUTION. A 10% penalty tax may be imposed on the withdrawal of
investment gains if the withdrawal is made prior to age 59 1/2. The penalty tax
will not be imposed on withdrawals taken on or after age 59 1/2, or if the
withdrawal follows the death of the Owner (or, if the Owner is not an
individual, the death of the primary Annuitant, as defined in the Code) or, in
the case of the Owner's "total disability" (as defined in the Code).
Furthermore, under Section 72 of the Code, this penalty tax will not be imposed,
irrespective of age, if the amount received is one of a series of substantially
equal periodic payments made at least annually for the life or life expectancy
of the payee. This requirement is met when the Owner elects to have
distributions made over the Owner's life expectancy, or over the joint life
expectancy of the Owner and beneficiary. The requirement that the amount be paid
out as one of a series of "substantially equal" periodic payments is met when
the number of units withdrawn to make each distribution is substantially the
same. Any modification,

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<PAGE>
other than by reason of death or disability, of distributions which are part of
a series of substantially equal periodic payments that occurs before the Owner's
age 59 1/2 or five years, will subject the Owner to the 10% penalty tax on the
prior distributions. In addition to the exceptions above, the penalty tax will
not apply to withdrawals from a qualified Contract made to an employee who has
terminated employment after reaching age 55.

In a Private Letter Ruling, the IRS took the position that where distributions
from a variable annuity contract were determined by amortizing the accumulated
value of the contract over the taxpayer's remaining life expectancy, and the
option could be changed or terminated at any time, the distributions failed to
qualify as part of a "series of substantially equal payments" within the meaning
of Section 72 of the Code. The distributions, therefore, were subject to the 10%
federal penalty tax. This Private Letter Ruling may be applicable to an Owner
who receives distributions under any LED-type option prior to age 59 1/2.
Subsequent Private Letter Rulings, however, have treated LED-type withdrawal
programs as effectively avoiding the 10% penalty tax. The position of the IRS on
this issue is unclear.

ASSIGNMENTS OR TRANSFERS. If the Owner transfers (assigns) the Contract to
another individual as a gift prior to the Annuity Date, the Code provides that
the Owner will incur taxable income at the time of the transfer. An exception is
provided for certain transfers between spouses. The amount of taxable income
upon such taxable transfer is equal to any investment gain in value over the
Owner's cost basis at the time of the transfer. The transfer also is subject to
federal gift tax provisions. Where the Owner and Annuitant are different
persons, the change of ownership of the Contract to the Annuitant on the Annuity
Date, as required under the Contract, is a gift and will be taxable to the Owner
as such; however, the Owner will not incur taxable income. Instead, the
Annuitant will incur taxable income upon receipt of annuity benefit payments as
discussed above.

NONNATURAL OWNERS. As a general rule, deferred annuity contracts owned by
"nonnatural persons" (e.g., a corporation) are not treated as annuity contracts
for federal tax purposes, and the investment income attributable to
contributions made after February 28, 1986 is taxed as ordinary income that is
received or accrued by the owner during the taxable year. This rule does not
apply to annuity contracts purchased with a single payment when the annuity date
is no later than a year from the issue date or to deferred annuities owned by
qualified employer plans, estates, employers with respect to a terminated
pension plan, and entities other than employers, such as a trust, holding an
annuity as an agent for a natural person. This exception, however, will not
apply in cases of any employer who is the owner of an annuity contract under a
non-qualified deferred compensation plan.

DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT
ORGANIZATIONS. Under Section 457 of the Code, deferred compensation plans
established by governmental and certain other tax-exempt employers for their
employees may invest in annuity contracts. Contributions and investment earnings
are not taxable to employees until distributed; however, with respect to
payments made after February 28, 1986, a Contract owned by a state or local
government or a tax-exempt organization will not be treated as an annuity under
Section 72 as well. In addition, plan assets are treated as property of the
employer, and are subject to the claims of the employer's general creditors.

D. TAX WITHHOLDING

The Code requires withholding with respect to payments or distributions from
non-qualified contracts and IRAs, unless a taxpayer elects not to have
withholding. A 20% withholding requirement applies to distributions from most
other qualified contracts. In addition, the Code requires reporting to the IRS
of the amount of income received with respect to payment or distributions from
annuities.

The tax treatment of certain withdrawals or surrenders of the non-qualified
Contracts offered by this Prospectus will vary according to whether the amount
withdrawn or surrendered is allocable to an investment in the Contract made
before or after certain dates.

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<PAGE>
E. PROVISIONS APPLICABLE TO QUALIFIED EMPLOYER PLANS

Federal income taxation of assets held inside a qualified retirement plan and of
earnings on those assets is deferred until distribution of plan benefits begins.
As such, it is not necessary to purchase a variable annuity contract solely to
obtain its tax deferral feature. However, other features offered under this
Contract and described in this Prospectus -- such as the minimum guaranteed
death benefit, the guaranteed fixed annuity rates and the wide variety of
investment options -- may make this Contract a suitable investment for your
qualified retirement plan.

The tax rules applicable to qualified retirement plans, as defined by the Code,
are complex and vary according to the type of plan. Benefits under a qualified
plan may be subject to that plan's terms and conditions irrespective of the
terms and conditions of any annuity contract used to fund such benefits. As
such, the following is simply a general description of various types of
qualified plans that may use the Contract. Before purchasing any annuity
contract for use in funding a qualified plan, more specific information should
be obtained.

Qualified Contracts may include special provisions (endorsements) changing or
restricting rights and benefits otherwise available to owners of non-qualified
Contracts. Individuals purchasing a qualified Contract should carefully review
any such changes or limitations which may include restrictions to ownership,
transferability, assignability, contributions, and distributions.

SELF-EMPLOYED ("H.R. 10" AND "KEOGH") PENSION AND PROFIT SHARING
PLANS. Sections 401(a), 401(k) and 403(a) of the Code permit business employers
and certain associations to establish various types of tax-favored retirement
plans for employees. The Self-Employed Individuals' Tax Retirement Act of 1962,
as amended, permits self-employed individuals to establish similar plans for
themselves and their employees. Employers intending to use qualified Contracts
in connection with such plans should seek competent advice as to the suitability
of the Contract to their specific needs and as to applicable Code limitations
and tax consequences.

The Company can provide prototype plans for certain pension or profit sharing
plans for review by the plan's legal counsel. For information, ask your
financial representative.

INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible
individuals to contribute to an individual retirement program known as an
Individual Retirement Annuity ("IRA"). Note: This term covers all IRAs permitted
under Section 408 of the Code, including Roth IRAs. IRAs are subject to limits
on the amounts that may be contributed, the persons who may be eligible, and on
the time when distributions may commence. In addition, certain distributions
from other types of retirement plans may be "rolled over," on a tax-deferred
basis, to an IRA. Purchasers of an IRA Contract will be provided with
supplementary information as may be required by the IRS or other appropriate
agency, and will have the right to cancel the Contract as described in this
Prospectus. See "B. Right to Cancel Individual Retirement Annuity."

Eligible employers that meet specified criteria may establish simplified
employee pension plans (SEP-IRAs) or SIMPLE IRA plans for their employees using
IRAs. Employer contributions that may be made to such plans are larger than the
amounts that may be contributed to regular IRAs and may be deductible to the
employer.

TAX-SHELTERED ANNUITIES ("TSAS"). Under the provisions of Section 403(b) of the
Code, payments made to annuity Contracts purchased for employees under annuity
plans adopted by public school systems and certain organizations which are tax
exempt under Section 501(c)(3) of the Code are excludable from the gross income
of such employees to the extent that total annual payments do not exceed the
maximum contribution permitted under the Code. Purchasers of TSA contracts
should seek competent advice as to eligibility, limitations on permissible
payments and other tax consequences associated with the contracts.

45
<PAGE>
Withdrawals or other distributions attributable to salary reduction
contributions (including earnings thereon) made to a TSA contract after
December 31, 1988, may not begin before the employee attains age 59 1/2,
separates from service, dies or becomes disabled. In the case of hardship, an
Owner may withdraw amounts contributed by salary reduction, but not the earnings
on such amounts. Even though a distribution may be permitted under these rules
(e.g., for hardship or after separation from service), it may be subject to a
10% penalty tax as a premature distribution, in addition to income tax.

TEXAS OPTIONAL RETIREMENT PROGRAM. Distributions under a TSA contract issued to
participants in the Texas Optional Retirement Program may not be received except
in the case of the participant's death, retirement or termination of employment
in the Texas public institutions of higher education. These additional
restrictions are imposed under the Texas Government Code and a prior opinion of
the Texas Attorney General.

STATEMENTS AND REPORTS

An Owner is sent a report semi-annually which provides certain financial
information about the Underlying Funds. At least annually, but possibly as
frequent as quarterly, the Company will furnish a statement to the Owner
containing information about his or her Contract, including Accumulation Unit
Values and other information as required by applicable law, rules and
regulations. The Company will also send a confirmation statement to Owners each
time a transaction is made affecting the Contract Value. (Certain transactions
made under recurring payment plans such as Dollar Cost Averaging may in the
future be confirmed quarterly rather than by immediate confirmations.) The Owner
should review the information in all statements carefully. All errors or
corrections must be reported to the Company immediately to assure proper
crediting to the Contract. The Company will assume that all transactions are
accurately reported on confirmation statements and quarterly/annual statements
unless the Owner notifies the Principal Office in writing within 30 days after
receipt of the statement.

LOANS (QUALIFIED CONTRACTS ONLY)

Loans are available to Owners of TSA Contracts (i.e., contracts issued under
Section 403(b) of the Code) and to Contracts issued to plans qualified under
Sections 401(a) and 401(k) of the Code. Loans are subject to provisions of the
Code and to applicable qualified retirement plan rules. Tax advisors and plan
fiduciaries should be consulted prior to exercising loan privileges.

Loaned amounts will be withdrawn first from Sub-Account and Fixed Account values
on a pro-rata basis until exhausted. Thereafter, any additional amounts will be
withdrawn from the Guarantee Period Accounts (pro-rata by duration and LIFO
within each duration), subject to any applicable Market Value Adjustments. The
maximum loan amount will be determined under the Company's maximum loan formula.
The minimum loan amount is $1,000. Loans will be secured by a security interest
in the Contract and the amount borrowed will be transferred to a loan asset
account within the Company's General Account, where it will accrue interest at a
specified rate below the then-current loan rate. Generally, loans must be repaid
within five years or less, and repayments must be made quarterly and in
substantially equal amounts. Repayments will be allocated pro-rata in accordance
with the most recent payment allocation, except that any allocations to a
Guarantee Period Account will instead be allocated to the Money Market Fund.

ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS

The Company reserves the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares that are held in the
Sub-Accounts or that the Sub-Accounts may purchase. If the shares of any
Underlying Fund no longer are available for investment or if, in the Company's
judgment, further investment in any Underlying Fund should become inappropriate
in view of the purposes of the Variable Account or the affected Sub-Account, the
Company may withdraw the shares of that Underlying Fund and substitute shares of
another registered open-end management company. The Company will not substitute
any shares attributable to a Contract interest in a Sub-Account without notice
to the Owner and prior approval of

46
<PAGE>
the SEC and state insurance authorities, to the extent required by the 1940 Act
or other applicable law. The Variable Account may, to the extent permitted by
law, purchase other securities for other contracts or permit a conversion
between contracts upon request by an Owner.

The Company also reserves the right to establish additional Sub-Accounts of the
Variable Account, each of which would invest in shares corresponding to a new
Underlying Fund or in shares of another investment company having a specified
investment objective. Subject to applicable law and any required SEC approval,
the Company may, in its sole discretion, establish new Sub-Accounts or eliminate
one or more Sub-Accounts if marketing needs, tax considerations or investment
conditions warrant. Any new Sub-Accounts may be made available to existing
Owners on a basis to be determined by the Company.

Shares of the Underlying Funds also are issued to variable accounts of the
Company and its affiliates which issue variable life contracts ("mixed
funding"). Shares of the Underlying Funds also are issued to other unaffiliated
insurance companies ("shared funding"). It is conceivable that in the future
such mixed funding or shared funding may be disadvantageous for variable life
owners or variable annuity owners. Although the Company, the Trust, Fidelity VIP
and T. Rowe Price do not currently foresee any such disadvantages to either
variable life insurance owners or variable annuity owners, the Company and the
respective trustees intend to monitor events in order to identify any material
conflicts between such owners, and to determine what action, if any, should be
taken in response thereto. If the trustees were to conclude that separate funds
should be established for variable life and variable annuity separate accounts,
the Company will bear the attendant expenses.

The Company reserves the right, subject to compliance with applicable law, to:

(1) transfer assets from the Variable Account or any of its Sub-Accounts to
another of the Company's separate accounts or sub-accounts having assets of
the same class,

(2) to operate the Variable Account or any Sub-Account as a management
investment company under the 1940 Act or in any other form permitted by law,

(3) to deregister the Variable Account under the 1940 Act in accordance with the
requirements of the 1940 Act,

(4) to substitute the shares of any other registered investment company for the
Underlying Fund shares held by a Sub-Account, in the event that Underlying
Fund shares are unavailable for investment, or if the Company determines
that further investment in such Underlying Fund shares is inappropriate in
view of the purpose of the Sub-Account,

(5) to change the methodology for determining the net investment factor, and

(6) to change the names of the Variable Account or of the Sub-Accounts, and

(7) to combine with other Sub-Accounts or other Separate Accounts of the
Company.

If any of these substitutions or changes are made, the Company may endorse the
Contract to reflect the substitution or change, and will notify Owners of all
such changes. In no event will the changes described above be made without
notice to Owners in accordance with the 1940 Act.

CHANGES TO COMPLY WITH LAW AND AMENDMENTS

The Company reserves the right, without the consent of Owners, to suspend sales
of the Contract as presently offered. The Company also reserves the right to
make any change to provisions of the Contract to comply with, or give Owners the
benefit of, any federal or state statute, rule or regulation, including but not
limited to requirements for annuity contracts and retirement plans under the
Code. Any such changes will apply uniformly to all Contracts that are affected.
You will be given written notice of such changes.

47
<PAGE>
VOTING RIGHTS

The Company will vote Underlying Fund shares held by each Sub-Account in
accordance with instructions received from Owners. Each person having a voting
interest in a Sub-Account will be provided with proxy materials of the
Underlying Fund, together with a form with which to give voting instructions to
the Company. Shares for which no timely instructions are received will be voted
in proportion to the instructions which are received. The Company also will vote
shares in a Sub-Account that it owns and which are not attributable to Contracts
in the same proportion. If the 1940 Act or any rules thereunder should be
amended or if the present interpretation of the 1940 Act or such rules should
change, and as a result the Company determines that it is permitted to vote
shares in its own right (whether or not such shares are attributable to the
Contract) the Company reserves the right to do so.

The number of votes which an Owner may cast will be determined by the Company as
of the record date established by the Underlying Fund. During the accumulation
period, the number of Underlying Fund shares attributable to each Owner will be
determined by dividing the dollar value of the Accumulation Units of the
Sub-Account credited to the Contract by the net asset value of one Underlying
Fund share. During the annuity period, the number of Underlying Fund shares
attributable to each Owner will be determined by dividing the reserve held in
each Sub-Account for the Owner's Variable Annuity by the net asset value of one
Underlying Fund share. Ordinarily, the Owner's voting interest in the Underlying
Fund will decrease as the reserve for the Variable Annuity is depleted.

DISTRIBUTION

The Contract offered by this Prospectus may be purchased from certain
independent broker-dealers which are registered under the Securities and
Exchange Act of 1934 Act and members of the National Association of Securities
Dealers, Inc. ("NASD"). The Contract also is offered through Allmerica
Investments, Inc., which is the principal underwriter and distributor of the
Contracts. Allmerica Investments, Inc., 440 Lincoln Street, Worcester, MA 01653,
is a registered broker-dealer, a member of the NASD and an indirectly wholly
owned subsidiary of First Allmerica.

The Company pays commissions not to exceed 1.0% of payments to broker-dealers
which sell the Contract, plus ongoing annual compensation of up to 1.0% of
Contract value. To the extent permitted by NASD rules, overrides and promotional
incentives or payments also may be provided to General Agents, independent
marketing organizations, and broker-dealers based on sales volumes, the
assumption of wholesaling functions, or other sales-related criteria. Additional
payments may be made for other services not directly related to the sale of the
Contract, including the recruitment and training of personnel, production of
promotional literature, and similar services.

Owners may direct any inquiries to their financial representative or to
Allmerica Investments, Inc., 440 Lincoln Street, Worcester, MA 01653, telephone
1-800-366-1492.

LEGAL MATTERS

There are no legal proceedings pending to which the Variable Account is a party,
or to which the assets of the Variable Account are subject. The Company and the
Principal Underwriter are not involved in any litigation

FURTHER INFORMATION

A Registration Statement under the 1933 Act relating to this offering has been
filed with the SEC. Certain portions of the Registration Statement and
amendments have been omitted in this Prospectus pursuant to the rules and
regulations of the SEC. The omitted information may be obtained from the SEC's
principal office in Washington, D.C., upon payment of the SEC's prescribed fees.

48
<PAGE>
APPENDIX A
MORE INFORMATION ABOUT THE FIXED ACCOUNT

Because of exemption and exclusionary provisions in the securities laws,
interests in the Fixed Account generally are not subject to regulation under the
provisions of the 1933 Act or the 1940 Act. Disclosures regarding the fixed
portion of the annuity Contract and the Fixed Account may be subject to the
provisions of the 1933 Act concerning the accuracy and completeness of
statements made in this Prospectus. The disclosures in this APPENDIX A have not
been reviewed by the SEC.

The Fixed Account is part of the Company's General Account which is made up of
all of the general assets of the Company other than those allocated to a
separate account. Allocations to the Fixed Account become part of the assets of
the Company and are used to support insurance and annuity obligations. A portion
or all of net payments may be allocated to accumulate at a fixed rate of
interest in the Fixed Account. Such net amounts are guaranteed by the Company as
to principal and a minimum rate of interest. Under the Contract, the minimum
interest which may be credited on amounts allocated to the Fixed Account is 3%
compounded annually. Additional "Excess Interest" may or may not be credited at
the sole discretion of the Company.

A-1
<PAGE>
APPENDIX B
PERFORMANCE TABLES
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
TABLE 1A
AVERAGE ANNUAL TOTAL RETURNS OF SUB-ACCOUNT
FOR PERIODS ENDING DECEMBER 31, 1999
SINCE INCEPTION OF SUB-ACCOUNT

<TABLE>
<CAPTION>
SUB-ACCOUNT FOR YEAR SINCE
INCEPTION ENDED INCEPTION OF
SUB-ACCOUNT INVESTING IN UNDERLYING FUND DATE 12/31/99 5 YEARS SUB-ACCOUNT
- ---------------------------------------- ----------- --------------- -------- ---------------
<S> <C> <C> <C> <C>
Select Emerging Markets Fund........... 2/20/98 63.16% N/A 13.30%
Select International Equity Fund....... 5/3/94 29.62% 16.72% 13.68%
T. Rowe Price International Stock
Portfolio............................. 5/1/95 31.21% N/A 13.69%
Select Aggressive Growth Fund.......... 9/8/92 36.47% 21.45% 19.01%
Select Capital Appreciation Fund....... 4/30/95 23.36% N/A 19.54%
Select Value Opportunity Fund.......... 2/20/98 -6.28% N/A -4.16%
Select Growth Fund..................... 9/8/92 27.74% 27.12% 18.83%
Select Strategic Growth Fund........... 2/20/98 14.19% N/A 5.12%
Fidelity VIP Growth Portfolio.......... 5/1/95 35.27% N/A 27.86%
Select Growth and Income Fund.......... 9/8/92 16.52% 19.84% 14.21%
Fidelity VIP Equity-Income Portfolio... 5/1/95 4.59% N/A 15.28%
Fidelity VIP High Income Portfolio..... 5/1/95 6.39% N/A 7.90%
Select Income Fund..................... 9/8/92 -2.49% 5.22% 3.84%
Money Market Fund...................... 10/8/92 3.46% 3.77% 3.13%
</TABLE>

TABLE 2A
AVERAGE ANNUAL TOTAL RETURNS OF SUB-ACCOUNT
FOR PERIODS ENDING DECEMBER 31, 1999
SINCE INCEPTION OF UNDERLYING FUND

<TABLE>
<CAPTION>
10 YEARS OR SINCE
FOR YEAR INCEPTION OF
UNDERLYING FUND ENDED UNDERLYING FUND
SUB-ACCOUNT INVESTING IN UNDERLYING FUND INCEPTION DATE 12/31/99 5 YEARS (IF LESS)
- ---------------------------------------- --------------- --------------- -------- -----------------
<S> <C> <C> <C> <C>
Select Emerging Markets Fund........ 2/20/98 63.16% N/A 13.30%
Select International Equity Fund.... 5/2/94 29.62% 16.72% 13.67%
T. Rowe Price International Stock
Portfolio.......................... 3/31/94 31.21% 13.39% 11.64%
Select Aggressive Growth Fund....... 8/21/92 36.47% 21.45% 18.87%
Select Capital Appreciation Fund.... 4/28/95 23.36% N/A 19.54%
Select Value Opportunity Fund....... 4/30/93 -6.28% 11.78% 9.84%
Select Growth Fund.................. 8/21/92 27.74% 27.12% 18.69%
Select Strategic Growth Fund........ 2/20/98 14.19% N/A 5.12%
Fidelity VIP Growth Portfolio....... 10/9/86 35.27% 27.77% 18.11%
Select Growth and Income Fund....... 8/21/92 16.52% 19.84% 14.11%
Fidelity VIP Equity-Income Portfolio.. 10/9/86 4.59% 16.80% 12.82%
Fidelity VIP High Income Portfolio... 9/19/85 6.39% 9.15% 10.72%
Select Income Fund.................. 8/21/92 -2.49% 5.22% 3.82%
Money Market Fund................... 4/29/85 3.46% 3.77% 3.57%
</TABLE>

B-1
<PAGE>
APPENDIX C
PERFORMANCE TABLES
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
TABLE 1A
AVERAGE ANNUAL TOTAL RETURNS OF SUB-ACCOUNT
FOR PERIODS ENDING DECEMBER 31, 1999
SINCE INCEPTION OF SUB-ACCOUNT

<TABLE>
<CAPTION>
SUB-ACCOUNT FOR YEAR SINCE
INCEPTION ENDED INCEPTION OF
SUB-ACCOUNT INVESTING IN UNDERLYING FUND DATE 12/31/99 5 YEARS SUB-ACCOUNT
- ---------------------------------------- ----------- --------------- -------- ---------------
<S> <C> <C> <C> <C>
Select Emerging Markets Fund........... 2/20/98 63.20% N/A 13.35%
Select International Equity Fund....... 5/3/94 29.66% 16.66% 13.62%
T. Rowe Price International Stock
Portfolio............................. 5/1/95 31.24% N/A 13.72%
Select Aggressive Growth Fund.......... 4/21/94 36.51% 21.48% 18.59%
Select Capital Appreciation Fund....... 4/30/95 23.40% N/A 19.57%
Select Value Opportunity Fund.......... 2/20/98 -6.25% N/A -4.11%
Select Growth Fund..................... 4/21/94 27.77% 27.14% 24.14%
Select Strategic Growth Fund........... 2/20/98 14.23% N/A 5.16%
Fidelity VIP Growth Portfolio.......... 5/1/95 35.30% N/A 27.89%
Select Growth and Income Fund.......... 4/20/94 16.56% 19.87% 17.82%
Fidelity VIP Equity-Income Portfolio... 5/1/95 4.63% N/A 15.31%
Fidelity VIP High Income Portfolio..... 5/1/95 6.43% N/A 7.93%
Select Income Fund..................... 4/20/94 -2.45% 5.25% 4.44%
Money Market Fund...................... 4/7/94 3.50% 3.81% 3.64%
</TABLE>

TABLE 2A
AVERAGE ANNUAL TOTAL RETURNS OF SUB-ACCOUNT
FOR PERIODS ENDING DECEMBER 31, 1999
SINCE INCEPTION OF UNDERLYING FUND

<TABLE>
<CAPTION>
10 YEARS OR SINCE
FOR YEAR INCEPTION OF
UNDERLYING FUND ENDED UNDERLYING FUND
SUB-ACCOUNT INVESTING IN UNDERLYING FUND INCEPTION DATE 12/31/99 5 YEARS (IF LESS)
- ---------------------------------------- --------------- --------------- -------- -----------------
<S> <C> <C> <C> <C>
Select Emerging Markets Fund........ 2/20/98 63.20% N/A 13.35%
Select International Equity Fund.... 5/2/94 29.66% 16.66% 13.61%
T. Rowe Price International Stock
Portfolio.......................... 3/31/94 31.24% 13.42% 11.67%
Select Aggressive Growth Fund....... 8/21/92 36.51% 21.48% 18.89%
Select Capital Appreciation Fund.... 4/28/95 23.40% N/A 19.57%
Select Value Opportunity Fund....... 4/30/93 -6.25% 11.80% 9.86%
Select Growth Fund.................. 8/21/92 27.77% 27.14% 18.72%
Select Strategic Growth Fund........ 2/20/98 14.23% N/A 5.16%
Fidelity VIP Growth Portfolio....... 10/9/86 35.30% 27.80% 18.13%
Select Growth and Income Fund....... 8/21/92 16.56% 19.87% 14.14%
Fidelity VIP Equity-Income Portfolio.. 10/9/86 4.63% 16.82% 12.85%
Fidelity VIP High Income Portfolio... 9/19/85 6.43% 9.18% 10.74%
Select Income Fund.................. 8/21/92 -2.45% 5.25% 3.85%
Money Market Fund................... 4/29/85 3.50% 3.81% 3.60%
</TABLE>

C-1
<PAGE>
APPENDIX D
THE MARKET VALUE ADJUSTMENT

MARKET VALUE ADJUSTMENT -- The following are examples of how the Market Value
Adjustment works:

The market value factor is: [(1+i)/(1+j)] TO THE POWER OF n/365 - 1

The following examples assume:

1. The payment was allocated to a ten-year Guarantee Period Account with a
Guaranteed Interest Rate of 8%.

2. The date of surrender is seven years (2,555 days) from the expiration
date.

3. The value of the Guarantee Period Account is equal to $62,985.60 at the
end of three years.

4. No transfers or withdrawals affecting this Guarantee Period Account have
been made.

NEGATIVE MARKET VALUE ADJUSTMENT (UNCAPPED)*

Assume that on the date of surrender, the current rate (j) is 10.00% or 0.10

<TABLE>
<C> <C> <S>
The market value factor = [(1+i)/(1+j)] TO THE POWER OF n/365 - 1

= [(1+.08)/(1+.10)] TO THE POWER OF 2555/365 - 1

= (.98182) TO THE POWER OF 7 - 1

= -.12054

The market value adjustment = the market value factor multiplied by the withdrawal

= -.12054 X $62,985.60

= -$7,592.11
</TABLE>

POSITIVE MARKET VALUE ADJUSTMENT (UNCAPPED)*

Assume that on the date of surrender, the current rate (j) is 7.00% or 0.07

<TABLE>
<C> <C> <S>
The market value factor = [(1+i)/(1+j)] TO THE POWER OF n/365 - 1

= [(1+.08)/(1+.07)] TO THE POWER OF 2555/365 - 1

= (1.0093) TO THE POWER OF 7 - 1

= .06694

The market value adjustment = the market value factor multiplied by the withdrawal

= .06694 X $62,985.60

= $4,216.26
</TABLE>

*Uncapped is a straight application of the Market Value Adjustment formula when
the value produced is less than the cap.

D-1
<PAGE>
NEGATIVE MARKET VALUE ADJUSTMENT (CAPPED)*

Assume that on the date of surrender, the current rate (j) is 11.00% or 0.11

<TABLE>
<C> <C> <S>
The market value factor = [(1+i)/(1+j)] TO THE POWER OF n/365 - 1

= [(1+.08)/(1+.11)] TO THE POWER OF 2555/365 - 1

= (.97297) TO THE POWER OF 7 - 1

= -.17454

The market value adjustment = Minimum of the market value factor multiplied by the
withdrawal or the negative of the excess interest earned
over 3%

= Minimum (-.17454 X $62,985.60 or -$8,349.25)

= Minimum (-$10,993.51 or -$8,349.25)

= -$8,349.25
</TABLE>

POSITIVE MARKET VALUE ADJUSTMENT (CAPPED*)

Assume that on the date of surrender, the current rate (j) is 6.00% or 0.06

<TABLE>
<C> <C> <S>
The market value factor = [(1+i)/(1+j)] TO THE POWER OF n/365 - 1

= [(1+.08)/(1+.06)] TO THE POWER OF 2555/365 - 1

= (1.01887) TO THE POWER OF 7 - 1

= .13981

The market value adjustment = Minimum of the market value factor multiplied by the
withdrawal or the excess interest earned over 3%

= Minimum of (.13981 X $62,985.60 or $8,349.25)

= Minimum of ($8,806.02 or $8,349.25)

= $8,349.25
</TABLE>

*Capped takes into account the excess interest part of the Market Value
Adjustment formula when the value produced is greater than the cap.

D-2
<PAGE>
APPENDIX E
CONDENSED FINANCIAL INFORMATION
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
ALLMERICA SELECT SEPARATE ACCOUNT

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECT EMERGING
MARKETS FUND
Unit Value:
Beginning of
Period............ 0.776 1.000 N/A N/A N/A N/A N/A N/A
End of Period....... 1.268 0.776 N/A N/A N/A N/A N/A N/A
Units Outstanding at
End of Period (in
thousands)........... 14,502 5,209 N/A N/A N/A N/A N/A N/A

SELECT INTERNATIONAL
EQUITY FUND
Unit Value:
Beginning of
Period............ 1.608 1.400 1.357 1.128 0.956 1.000 N/A N/A
End of Period....... 2.089 1.608 1.400 1.357 1.128 0.956 N/A N/A
Units Outstanding at
End of Period (in
thousands)........... 109,511 103,028 93,170 60,304 35,558 22,183 N/A N/A

T. ROWE PRICE
INTERNATIONAL STOCK
PORTFOLIO
Unit Value:
Beginning of
Period............ 1.398 1.223 1.203 1.065 1.000 N/A N/A N/A
End of Period....... 1.837 1.398 1.223 1.203 1.065 N/A N/A N/A
Units Outstanding at
End of Period (in
thousands)........... 49,814 41,458 33,977 16,510 4,066 N/A N/A N/A

SELECT AGGRESSIVE
GROWTH FUND
Unit Value:
Beginning of
Period............ 2.637 2.419 2.066 1.768 1.354 1.405 1.192 1.192
End of Period....... 3.606 2.637 2.419 2.066 1.768 1.354 1.405 1.192
Units Outstanding at
End of Period (in
thousands)........... 85,192 86,699 81,233 64,262 51,006 36,330 17,538 5,123

SELECT CAPITAL
APPRECIATION FUND
Unit Value:
Beginning of
Period............ 1.878 1.672 1.484 1.383 1.000 N/A N/A N/A
End of Period....... 2.321 1.878 1.672 1.484 1.383 N/A N/A N/A
Units Outstanding at
End of Period (in
thousands)........... 62,949 54,789 43,733 24,257 5,424 N/A N/A N/A

SELECT VALUE
OPPORTUNITY FUND
Unit Value:
Beginning of
Period............ 0.989 1.000 N/A N/A N/A N/A N/A N/A
End of Period....... 0.929 0.989 N/A N/A N/A N/A N/A N/A
Units Outstanding at
End of Period (in
thousands)........... 43,839 18,240 N/A N/A N/A N/A N/A N/A

SELECT GROWTH FUND
Unit Value:
Beginning of
Period............ 2.793 2.091 1.582 1.315 1.069 1.101 1.104 1.000
End of Period....... 3.575 2.793 2.091 1.582 1.315 1.069 1.101 1.104
Units Outstanding at
End of Period (in
thousands)........... 134,059 120,538 98,533 68,193 53,073 38,752 20,366 5,246
</TABLE>

E-1
<PAGE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECT STRATEGIC
GROWTH FUND
Unit Value:
Beginning of
Period............ 0.964 1.000 N/A N/A N/A N/A N/A N/A
End of Period....... 1.103 0.964 N/A N/A N/A N/A N/A N/A
Units Outstanding at
End of Period (in
thousands)........... 17,712 8,709 N/A N/A N/A N/A N/A N/A

FIDELITY VIP GROWTH
PORTFOLIO
Unit Value:
Beginning of
Period............ 2.340 1.701 1.397 1.235 1.000 N/A N/A N/A
End of Period....... 3.171 2.340 1.701 1.397 1.235 N/A N/A N/A
Units Outstanding at
End of Period (in
thousands)........... 90,071 63,055 45,772 24,745 6,677 N/A N/A N/A

SELECT GROWTH AND
INCOME FUND
Unit Value:
Beginning of
Period............ 2.292 1.996 1.652 1.382 1.074 1.082 0.994 1.000
End of Period....... 2.676 2.292 1.996 1.652 1.382 1.074 1.082 0.994
Units Outstanding at
End of Period (in
thousands)........... 140,727 129,119 106,800 77,919 61,942 43,292 20,983 22,339

FIDELITY VIP
EQUITY-INCOME
PORTFOLIO
Unit Value:
Beginning of
Period............ 1.867 1.696 1.342 1.191 1.000 N/A N/A N/A
End of Period....... 1.957 1.867 1.696 1.342 1.191 N/A N/A N/A
Units Outstanding at
End of Period (in
thousands)........... 114,059 95,537 65,130 31,681 9,213 N/A N/A N/A

FIDELITY VIP HIGH
INCOME PORTFOLIO
Unit Value:
Beginning of
Period............ 1.350 1.430 1.233 1.096 1.000 N/A N/A N/A
End of Period....... 1.439 1.350 1.430 1.233 1.096 N/A N/A N/A
Units Outstanding at
End of Period (in
thousands)........... 87,413 74,986 50,470 23,051 6,714 N/A N/A N/A

SELECT INCOME FUND
Unit Value:
Beginning of
Period............ 1.371 1.301 1.208 1.186 1.028 1.095 1.001 1.000
End of Period....... 1.340 1.371 1.301 1.208 1.186 1.028 1.095 1.001
Units Outstanding at
End of Period (in
thousands)........... 110,437 102,171 72,394 58,751 46,845 32,823 18,320 5,372

MONEY MARKET FUND
Unit Value:
Beginning of
Period............ 1.227 1.179 1.133 1.091 1.045 1.019 1.003 1.000
End of Period....... 1.272 1.227 1.179 1.133 1.091 1.045 1.019 1.003
Units Outstanding at
End of Period
(in thousands)....... 127,048 92,796 65,441 60,691 45,589 31,836 19,802 1,447
</TABLE>

E-2
<PAGE>
CONDENSED FINANCIAL INFORMATION
FIORST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
ALLMERICA SELECT SEPARATE ACCOUNT

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1999 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SELECT EMERGING MARKETS FUND
Unit Value:
Beginning of Period................. 0.776 1.000 N/A N/A N/A N/A
End of Period....................... 1.268 0.776 N/A N/A N/A N/A
Units Outstanding at End of Period (in
thousands)........................... 1,090 582 N/A N/A N/A N/A

SELECT INTERNATIONAL EQUITY FUND
Unit Value:
Beginning of Period................. 1.608 1.400 1.356 1.128 0.956 1.000
End of Period....................... 2.088 1.608 1.400 1.356 1.128 0.956
Units Outstanding at End of Period (in
thousands)........................... 7,072 6,291 5,132 3,481 1900 695

T. ROWE PRICE INTERNATIONAL STOCK
PORTFOLIO
Unit Value:
Beginning of Period................. 1.397 1.223 1.203 1.065 1.000 N/A
End of Period....................... 1.837 1.397 1.223 1.203 1.065 N/A
Units Outstanding at End of Period (in
thousands)........................... 3,324 2,591 1,693 1,170 265 N/A

SELECT AGGRESSIVE GROWTH FUND
Unit Value:
Beginning of Period................. 1.948 1.786 1.526 1.305 1.044 1.000
End of Period....................... 2.663 1.948 1.786 1.526 1.305 1.044
Units Outstanding at End of Period (in
thousands)........................... 6,606 6,449 5,305 4,013 2,393 756

SELECT CAPITAL APPRECIATION FUND
Unit Value:
Beginning of Period................. 1.878 1.672 1.484 1.383 1.000 N/A
End of Period....................... 2.321 1.878 1.672 1.484 1.383 N/A
Units Outstanding at End of Period (in
thousands)........................... 3,247 2,662 1,914 1,366 391 N/A

SELECT VALUE OPPORTUNITY FUND
Unit Value:
Beginning of Period................. 0.989 0.000 N/A N/A N/A N/A
End of Period....................... 0.929 0.989 N/A N/A N/A N/A
Units Outstanding at End of Period (in
thousands)........................... 2,790 1,367 N/A N/A N/A N/A

SELECT GROWTH FUND
Unit Value
Beginning of Period................. 2.697 2.019 1.527 1.269 1.032 1.000
End of Period....................... 3.451 2.697 2.019 1.527 1.269 1.032
Units Outstanding at End of Period (in
thousands)........................... 8,012 6,841 5,168 3,534 2,177 756

SELECT STRATEGIC GROWTH FUND
Unit Value:
Beginning of Period................. 0.964 0.000 N/A N/A N/A N/A
End of Period....................... 1.103 0.964 N/A N/A N/A N/A
Units Outstanding at End of Period (in
thousands)........................... 1,655 694 N/A N/A N/A N/A

FIDELITY VIP GROWTH PORTFOLIO
Unit Value:
Beginning of Period................. 2.340 1.701 1.397 1.235 1.000 N/A
End of Period....................... 3.171 2.340 1.701 1.397 1.235 N/A
Units Outstanding at End of Period (in
thousands)........................... 5,957 3,567 2,198 1,326 262 N/A
</TABLE>

E-3
<PAGE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1999 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SELECT GROWTH AND INCOME FUND
Unit Value:
Beginning of Period................. 2.197 1.913 1.584 1.324 1.030 1.000
End of Period....................... 2.565 2.197 1.913 1.584 1.324 1.030
Units Outstanding at End of Period (in
thousands)........................... 11,775 9,924 7,897 5,670 3,673 1,724

FIDELITY VIP EQUITY-INCOME PORTFOLIO
Unit Value:
Beginning of Period................. 1.867 1.696 1.342 1.191 1.000 N/A
End of Period....................... 1.957 1.867 1.696 1.342 1.191 N/A
Units Outstanding at End of Period (in
thousands)........................... 8,173 5,779 3,421 1,802 429 N/A

FIDELITY VIP HIGH INCOME PORTFOLIO
Unit Value:
Beginning of Period................. 1.350 1.430 1.233 1.096 1.000 N/A
End of Period....................... 1.439 1.350 1.430 1.233 1.096 N/A
Units Outstanding at End of Period (in
thousands)........................... 6,325 5,261 2,753 1,298 273 N/A

SELECT INCOME FUND
Unit Value:
Beginning of Period................. 1.325 1.257 1.168 1.146 0.993 1.000
End of Period....................... 1.295 1.325 1.257 1.168 1.146 0.993
Units Outstanding at End of Period (in
thousands)........................... 10,936 11,009 6,061 4,956 4,114 1,916

MONEY MARKET FUND
Unit Value:
Beginning of Period................. 1.197 1.151 1.106 1.065 1.020 1.000
End of Period....................... 1.242 1.197 1.151 1.106 1.065 1.020
Units Outstanding at End of Period (in
thousands)........................... 11,367 8,761 6,157 6,060 4,027 2,085
</TABLE>

E-4
<PAGE>

FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

STATEMENT OF ADDITIONAL INFORMATION

INDIVIDUAL AND GROUP VARIABLE ANNUITY CONTRACTS FUNDED THROUGH

SUB-ACCOUNTS OF

ALLMERICA SELECT SEPARATE ACCOUNT

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE
READ IN CONJUNCTION WITH THE ALLMERICA SELECT CHARTER PROSPECTUS OF ALLMERICA
SELECT SEPARATE ACCOUNT DATED MAY 1, 2000 ("THE PROSPECTUS"). THE PROSPECTUS
MAY BE OBTAINED FROM ANNUITY CLIENT SERVICES, FIRST ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY, 440 LINCOLN STREET, WORCESTER, MASSACHUSETTS 01653,
TELEPHONE 1-800-366-1492.

DATED MAY 1, 2000

FAFLIC Select Charter

<PAGE>

TABLE OF CONTENTS

<TABLE>

<S> <C>
GENERAL INFORMATION AND HISTORY............................................ 2

TAXATION OF THE CONTRACT, THE VARIABLE ACCOUNT AND THE COMPANY............. 3

SERVICES................................................................... 3

UNDERWRITERS............................................................... 3

ANNUITY BENEFIT PAYMENTS................................................... 4

ENHANCED AUTOMATIC TRANSFER (DOLLAR COST AVERAGING) PROGRAM................ 5

PERFORMANCE INFORMATION.................................................... 6

FINANCIAL STATEMENTS....................................................... F-1
</TABLE>

GENERAL INFORMATION AND HISTORY

Allmerica Select Separate Account (the "Variable Account") is a separate
investment account of First Allmerica Financial Life Insurance Company (the
"Company") authorized by vote of its Board of Directors on August 20, 1991.
The Company, organized under the laws of Massachusetts in 1844, is among the
five oldest life insurance companies in America. As of December 31, 1999, the
Company and its subsidiaries had over $25 billion in combined assets and over
$43 billion of life insurance in force. Effective October 16, 1995, the
Company converted from a mutual life insurance company, known as State Mutual
Life Assurance Company of America, to a stock life insurance company and
adopted its present name. The Company is a wholly owned subsidiary of
Allmerica Financial Corporation ("AFC"). The Company's principal office (the
"Principal Office") is located at 440 Lincoln Street, Worcester, Massachusetts
01653, telephone (508) 855-1000.

The Company is subject to the laws of the Commonwealth of Massachusetts
governing insurance companies and to regulation by the Commissioner of
Insurance in Massachusetts. In addition, the Company is subject to the
insurance laws and regulations of other states and jurisdictions in which it
is licensed to operate.

Currently, 14 Sub-Accounts of the Variable Account are available under the
Allmerica Select Charter contract (the "Contract"). Each Sub-Account
invests in a corresponding investment portfolio of Allmerica Investment
Trust ("Trust"), Fidelity Variable Insurance Products Fund ("Fidelity VIP")
or T. Rowe Price International Series, Inc. ("T. Rowe Price"). The Trust is
managed by Allmerica Financial Investment Management Services, Inc.
Fidelity VIP is managed by Fidelity Management & Research Company ("FMR").
The T. Rowe Price International Stock Portfolio of T. Rowe Price is managed
by Rowe Price-Fleming International, Inc.

The Trust, Fidelity VIP and T. Rowe Price are open-end, diversified
management investment companies. Ten different funds of the Trust are
available under the Contract: the Select Emerging Markets Fund, Select
International Equity Fund, Select Aggressive Growth Fund, Select Capital
Appreciation Fund, Select Value Opportunity Fund, Select Growth Fund, Select
Strategic Growth Fund, Select Growth and Income Fund, Select Income Fund and
Money Market Fund. Three portfolios of Fidelity VIP are available under the
Contract: the Fidelity VIP High Income Portfolio, Fidelity VIP Equity-Income
Portfolio, and Fidelity VIP Growth Portfolio. One portfolio of T. Rowe
Price is available under the Contract: the T. Rowe Price
International Stock Portfolio.

<PAGE>

Each Fund and Portfolio available under the Contract (together, the
"Underlying Funds") has its own investment objectives and certain attendant
risks.

TAXATION OF THE CONTRACT, THE VARIABLE
ACCOUNT AND THE COMPANY

The Company currently imposes no charge for taxes payable in connection with
the Contract, other than for state and local premium taxes and similar
assessments when applicable. The Company reserves the right to impose a
charge for any other taxes that may become payable in the future in
connection with the Contract or the Variable Account.

The Variable Account is considered to be a part of and taxed with the
operations of the Company. The Company is taxed as a life insurance company
under subchapter L of the Internal Revenue Code (the "Code"), and files a
consolidated tax return with its affiliated companies.

The Company reserves the right to make a charge for any effect which the
income, assets or existence of the Contract or the Variable Account may have
upon its tax. Such charge for taxes, if any, will be assessed on a fair and
equitable basis in order to preserve equity among classes of Contract Owners
("Owners"). The Variable Account presently is not subject to tax.

SERVICES

CUSTODIAN OF SECURITIES. The Company serves as custodian of the assets of the
Variable Account. Underlying Fund shares owned by the Sub-Accounts are held
on an open account basis. A Sub-Account's ownership of Underlying Fund shares
is reflected on the records of the Underlying Fund and is not represented by
any transferable stock certificates.

EXPERTS. The financial statements of the Company as of December 31, 1999 and
1998 and for each of the three years in the period ended December 31, 1999,
and the financial statements of Allmerica Select Separate Account of the
Company as of December 31, 1999 and for the periods indicated, included in
this Statement of Additional Information constituting part of this
Registration Statement, have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.

The financial statements of the Company included herein should be considered
only as bearing on the ability of the Company to meet its obligations under
the Contract.

UNDERWRITERS

Allmerica Investments, Inc. ("Allmerica Investments"), a registered
broker-dealer under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc. ("NASD"), serves as principal
underwriter and general distributor for the Contract pursuant to a contract
with Allmerica Investments, the Company and the Variable Account. Allmerica
Investments distributes the Contract on a best-efforts basis. Allmerica
Investments, Inc., 440 Lincoln Street, Worcester, Massachusetts 01653 was
organized in 1969 as a wholly owned subsidiary of First Allmerica and
presently is indirectly wholly owned by First Allmerica.

The Contract offered by this Prospectus is offered continuously, and may be
purchased from certain independent broker-dealers which are NASD members and
whose representatives are authorized by applicable law to sell variable
annuity contracts.

<PAGE>

All persons selling the Contract are required to be licensed by their
respective state insurance authorities for the sale of variable annuity
contracts. The Company pays commissions, not to exceed 1.0% of purchase
payments, to entities which sell the Contract. To the extent permitted by
NASD rules, promotional incentives or payments also may be provided to such
entities based on sales volumes, the assumption of wholesaling functions or
other sales-related criteria. Additional payments may be made for other
services not directly related to the sale of the Contract, including the
recruitment and training of personnel, production of promotional literature
and similar services.

Commissions paid by the Company do not result in any charge to Owners or to
the Variable Account in addition to the charges described under "CHARGES AND
DEDUCTIONS" in the Prospectus.

The aggregate amounts of commissions paid to Allmerica Investments for sales
of all contracts funded by Allmerica Select Separate Account (including
contracts not described in the Prospectus) for the years 1997, 1998 and 1999
were $1,394,498, $2,436,973 and $2,589,970.

No commissions were retained by Allmerica Investments for sales of all
contracts funded by Allmerica Select Separate Account (including contracts
not described in the Prospectus) for the years 1997, 1998 and 1999.

ANNUITY BENEFIT PAYMENTS

The method by which the Accumulated Value under the Contract is determined is
described in detail under "Computation of Values" in the Prospectus.

ILLUSTRATION OF ACCUMULATION UNIT CALCULATION USING HYPOTHETICAL EXAMPLE. The
Accumulation Unit calculation for a daily Valuation Period may be illustrated
by the following hypothetical example: Assume that the assets of a
Sub-Account at the beginning of a one-day Valuation Period were $5,000,000;
that the value of an Accumulation Unit on the previous date was $1.135000;
and that during the Valuation Period, the investment income and net realized
and unrealized capital gains exceed net realized and unrealized capital
losses by $1,675. The Accumulation Unit Value at the end of the current
Valuation Period would be calculated as follows:

<TABLE>

<S> <C>

(1) Accumulation Unit Value -- Previous Valuation Period....... $ 1.135000

(2) Value of Assets -- Beginning of Valuation Period........... $5,000,000

(3) Excess of Investment Income and Net Gains Over Capital
Losses..................................................... $ 1,675

(4) Adjusted Gross Investment Rate for the Valuation Period
(3) divided by (2)......................................... 0.000335

(5) Annual Charge (one-day equivalent of 1.40% per annum)...... 0.000039

(6) Net Investment Rate (4) - (5).............................. 0.000296

(7) Net Investment Factor 1.000000 + (6)....................... 1.000296

(8) Accumulation Unit Value -- Current Period (1) x (7)........ $ 1.135336

</TABLE>

Conversely, if unrealized capital losses and charges for expenses and taxes
exceeded investment income and net realized capital gains of $1,675, the
Accumulation Unit Value at the end of the Valuation Period would have been
$1.134576.

<PAGE>

The method for determining the amount of annuity benefit payments is
described in detail under "Annuity Benefit Payments" in the Prospectus.

ILLUSTRATION OF VARIABLE ANNUITY BENEFIT PAYMENT CALCULATION USING
HYPOTHETICAL EXAMPLE. The determination of the Annuity Unit Value and the
variable annuity benefit payment may be illustrated by the following
hypothetical example: Assume an Annuitant has 40,000 Accumulation Units in a
Variable Account, and that the value of an Accumulation Unit on the Valuation
Date used to determine the amount of the first variable annuity benefit
payment is $1.120000. Therefore, the Accumulated Value of the Contract is
$44,800 (40,000 x $1.120000). Assume also that the Owner elects an option for
which the first monthly payment is $6.57 per $1,000 of Accumulated Value
applied. Assuming no premium tax, the first monthly payment would be $44.80
($44,800 divided by $1,000) multiplied by $6.57, or $294.34.

Next, assume that the Annuity Unit Value for the assumed interest rate of
3.5% per annum for the Valuation Date as of which the first payment was
calculated was $1.100000. Annuity Unit Values will not be the same as
Accumulation Unit Values because the former reflect the 3.5% assumed interest
rate used in the annuity rate calculations. When the Annuity Unit Value of
$1.100000 is divided into the first monthly payment, the number of Annuity
Units represented by that payment is determined to be 267.5818. The value of
this same number of Annuity Units will be paid in each subsequent month under
most options. Assume further that the net investment factor for the Valuation
Period applicable to the next annuity benefit payment is 1.000190.
Multiplying this factor by .999906 (the one-day adjustment factor for the
assumed interest rate of 3.5% per annum) produces a factor of 1.000096. This
then is multiplied by the Annuity Unit Value on the immediately preceding
Valuation Date (assumed here to be $1.105000). The result is an Annuity Unit
Value of $1.105106 for the current monthly payment. The current monthly
payment then is determined by multiplying the number of Annuity Units by the
current Annuity Unit Value, or 267.5818 times $1.105106, which produces a
current monthly payment of $295.71.

METHOD FOR DETERMINING COMMUTED VALUE ON VARIABLE ANNUITY PERIOD CERTAIN
OPTIONS AND ILLUSTRATION USING HYPOTHETICAL EXAMPLE. The Contract offers both
commutable and noncommutable fixed period certain annuity options and
commutable variable period certain options. A commutable option gives the
Annuitant the right to exchange any remaining payments for a lump sum payment
based on the commuted value. The Commuted Value is the present value of
remaining payments calculated at 3.5% interest. The determination of the
Commuted Value may be illustrated by the following hypothetical example.

Assume a commutable period certain option is elected. The number of Annuity
Units on which each payment is based would be calculated using the Surrender
Value less any premium tax rather than the Accumulated Value. Assume this
results in 250.0000 Annuity Units. Assume the Commuted Value is requested
with 60 monthly payments remaining and a current Annuity Unit Value of
$1.200000. Based on these assumptions, the dollar amount of remaining
payments would be $300 a month for 60 months. The present value at 3.5% of
all remaining payments would be $16,560.72.

ENHANCED AUTOMATIC TRANSFER (DOLLAR COST AVERAGING) PROGRAM

To the extent permitted by law, the Company reserves the right to offer an
Enhanced Automatic Transfer (Dollar Cost Averaging) Program from time to
time. If an Owner elects automatic transfers while the enhanced program is
in effect, the Company will credit an enhanced interest rate to eligible
payments made to the Enhanced Automatic Transfer Program. Eligible payments:

-- must be new payments to the Contract, including the initial payment,

-- must be allocated to the Fixed Account, which will be the source
account,

<PAGE>

-- must be automatically transferred out of the Fixed Account to one or
more Sub-Accounts over a specified time period and

-- will receive the enhanced rate while they remain in the Fixed Account.

Any new eligible payments made to an existing Enhanced Automatic Transfer
program will start a new Enhanced Automatic Transfer program. In this case,
the following rules apply:

-- The money remaining in the Fixed Account from the original program
will be combined with the new eligible payment to determine the new
monthly transfer amount.

-- The new monthly transfer amount will be transferred out of the Fixed
Account in accordance with the allocation instructions specified for
the new payment. If no allocation instructions are specified with the
new eligible payment, the allocation instructions for the original
eligible payment will be used. The new monthly transfer amount will be
transferred out of the Fixed Account on a LIFO (last-in, first-out
basis) to the selected Sub-Accounts on the date designated for the new
eligible payment.

- -- A new enhanced interest rate may be applied to the new eligible payment,
while the money remaining in the Fixed Account from the original program will
continue to receive the enhanced rate in effect at the time the older payment
was received.

PERFORMANCE INFORMATION

Performance information for a Sub-Account may be compared, in reports and
promotional literature, to certain indices described in the Prospectus under
"PERFORMANCE INFORMATION". In addition, the Company may provide advertising,
sales literature, periodic publications or other material information on
various topics of interest to Owners and prospective Owners. These topics may
include the relationship between sectors of the economy and the economy as a
whole and its effect on various securities markets, investment strategies and
techniques (such as value investing, market timing, dollar cost averaging,
asset allocation, constant ratio transfer and account rebalancing), the
advantages and disadvantages of investing in tax-deferred and taxable
investments, customer profiles and hypothetical purchase and investment
scenarios, financial management and tax and retirement planning, and
investment alternatives to certificates of deposit and other financial
instruments, including comparisons between the Contract and the
characteristics of and market for such financial instruments.

Total return data and supplemental total return information may be advertised
based on the period of time that an Underlying Fund and an underlying
Sub-Account have been in existence, even if longer than the period of time
that the Contract has been offered. The results for any period prior to a
Contract being offered will be calculated as if the Contract had been offered
during that period of time, with all charges assumed to be those applicable
to the Contract.

TOTAL RETURN

"Total Return" refers to the total of the income generated by an investment
in a Sub-Account and of the changes of value of the principal invested (due
to realized and unrealized capital gains or losses) for a specified period,
reduced by the Sub-Account's asset charge.

Total Return figures are calculated by standardized methods prescribed by
rules of the Securities and Exchange Commission ("SEC"). The quotations are
computed by finding the average annual compounded rates of return over the
specified periods that would equate the initial amount invested to the ending
redeemable values, according to the following formula:

<PAGE>

(n)
P(1 + T) = ERV

Where: P = a hypothetical initial payment to the Variable Account of
$1,000

T = average annual total return

N = number of years

ERV = the ending redeemable value of the $1,000 payment at the end of
the specified period

The calculation of Total Return includes the annual charges against the
assets of the Sub-Account. This charge is 1.40% on an annual basis. The
calculation of ending redeemable value assumes (1) the Contract was issued at
the beginning of the period, and (2) a complete surrender of the Contract at
the end of the period.

The calculations of Total Return include the deduction of the $30 annual
Contract fee.

YIELD AND EFFECTIVE YIELD -- THE MONEY MARKET SUB-ACCOUNT

Set forth below is yield and effective yield information for the Money Market
Sub-Account for the seven-day period ended December 31, 1999:

<TABLE>

<S> <C>
Yield 4.55%
Effective Yield 4.67%
</TABLE>

The yield and effective yield figures are calculated by standardized methods
prescribed by rules of the SEC. Under those methods, the yield quotation is
computed by determining the net change (exclusive of capital changes) in the
value of a hypothetical pre-existing account having a balance of one
accumulation unit of the Sub-Account at the beginning of the period, dividing
the difference by the value of the account at the beginning of the same
period to obtain the base period return, and then multiplying the return for
a seven-day base period by (365/7), with the resulting yield carried to the
nearest hundredth of one percent.

The Money Market Sub-Account computes effective yield by compounding the
unannualized base period return by using the formula:

(365/7)
Effective Yield = [(base period return + 1) ] - 1

The calculations of yield and effective yield reflect the $30 annual Contract
fee.

FINANCIAL STATEMENTS

Financial Statements are included for First Allmerica Financial Life
Insurance Company and for its Allmerica Select Separate Account.

<PAGE>
FIRST ALLMERICA
FINANCIAL LIFE
INSURANCE COMPANY

CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholder of
First Allmerica Financial Life Insurance Company

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, comprehensive income, shareholder's equity
and cash flows present fairly, in all material respects, the financial position
of First Allmerica Financial Life Insurance Company (the "Company") at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

/s/ PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts
February 1, 2000
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
------------- ---- ---- ----
<S> <C> <C> <C>
REVENUES
Premiums................................... $ 954.5 $1,969.5 $1,980.4
Universal life and investment product
policy fees.............................. 359.3 296.6 237.3
Net investment income...................... 503.1 593.9 619.5
Net realized investment gains.............. 100.3 60.9 76.3
Other income............................... 107.3 100.0 81.5
-------- -------- --------
Total revenues......................... 2,024.5 3,020.9 2,995.0
-------- -------- --------
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss
adjustment expenses...................... 1,056.3 1,803.0 1,763.9
Policy acquisition expenses................ 240.9 449.6 421.8
Sales practice litigation.................. -- 31.0 --
Loss from cession of disability income
business................................. -- -- 53.9
Restructuring costs........................ -- 9.0 --
Other operating expenses................... 346.3 419.7 404.0
-------- -------- --------
Total benefits, losses and expenses.... 1,643.5 2,712.3 2,643.6
-------- -------- --------
Income from continuing operations before
federal income taxes.......................... 381.0 308.6 351.4
-------- -------- --------
FEDERAL INCOME TAX EXPENSE (BENEFIT)
Current.................................... 88.7 74.6 74.4
Deferred................................... 4.3 (15.4) 14.2
-------- -------- --------
Total federal income tax expense....... 93.0 59.2 88.6
-------- -------- --------
Income from continuing operations before
minority interest............................. 288.0 249.4 262.8
Minority interest.......................... (39.9) (55.0) (79.4)
-------- -------- --------
Income from continuing operations.............. 248.1 194.4 183.4
(Loss) income from operations of discontinued
business (less applicable income taxes
(benefit) of $(10.1), $(7.0) and $8.9 for the
years ended December 31, 1999, 1998 and 1997,
respectively) (17.2) (13.5) 16.6

Loss on disposal of group life and health
business, including provision of $72.2 for
operating losses during phase-out period for
the year ended December 31, 1999 (less
applicable income tax benefit of $16.4) (30.5) -- --
-------- -------- --------
Net income..................................... $ 200.4 $ 180.9 $ 200.0
======== ======== ========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-1
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS, EXCEPT PER SHARE DATA) 1999 1998
------------------------------------ --------- ---------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities at fair value (amortized cost of
$3,721.6 and $7,520.8)............................ $ 3,660.7 $ 7,683.9
Equity securities at fair value (cost of $27.9 and
$253.1)........................................... 51.4 397.1
Mortgage loans...................................... 521.2 562.3
Policy loans........................................ 170.5 154.3
Real estate and other long-term investments......... 177.0 163.1
--------- ---------
Total investments............................... 4,580.8 8,960.7
--------- ---------
Cash and cash equivalents............................. 279.3 504.0
Accrued investment income............................. 73.3 141.0
Deferred policy acquisition costs..................... 1,219.5 1,161.2
Reinsurance receivable on unpaid losses, benefits and
unearned premiums................................... 480.3 1,136.4
Deferred federal income taxes......................... 18.1 19.4
Premiums, accounts and notes receivable............... 81.0 510.5
Other assets.......................................... 199.6 530.6
Closed Block assets................................... 772.3 803.1
Separate account assets............................... 17,629.6 13,697.7
--------- ---------
Total assets.................................... $25,333.8 $27,464.6
========= =========
LIABILITIES
Policy liabilities and accruals:
Future policy benefits.............................. $ 2,825.0 $ 2,802.2
Outstanding claims, losses and loss adjustment
expenses.......................................... 218.8 2,815.9
Unearned premiums................................... 6.6 843.2
Contractholder deposit funds and other policy
liabilities....................................... 2,025.5 2,637.0
--------- ---------
Total policy liabilities and accruals........... 5,075.9 9,098.3
--------- ---------
Expenses and taxes payable............................ 512.0 681.9
Reinsurance premiums payable.......................... 17.9 50.2
Trust instruments supported by funding obligations.... 50.6 --
Short-term debt....................................... -- 221.3
Closed Block liabilities.............................. 842.1 872.0
Separate account liabilities.......................... 17,628.9 13,691.5
--------- ---------
Total liabilities............................... 24,127.4 24,615.2
--------- ---------
Minority interest..................................... -- 532.9
Commitments and contingencies (Notes 16 and 21)
SHAREHOLDER'S EQUITY
Common stock, $10 par value, 1 million shares
authorized, 500,001 shares issued and outstanding... 5.0 5.0
Additional paid-in capital............................ 569.0 444.0
Accumulated other comprehensive (loss) income......... (14.9) 169.2
Retained earnings..................................... 647.3 1,698.3
--------- ---------
Total shareholder's equity...................... 1,206.4 2,316.5
--------- ---------
Total liabilities and shareholder's equity...... $25,333.8 $27,464.6
========= =========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-2
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
------------- -------- -------- --------
<S> <C> <C> <C>
COMMON STOCK................................... $ 5.0 $ 5.0 $ 5.0
-------- -------- --------
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of period............. 444.0 453.7 392.4
Capital contribution from parent........... 125.0 -- 61.3
Loss on change of interest-Allmerica P&C... -- (9.7) --
-------- -------- --------
Balance at end of period................... 569.0 444.0 453.7
-------- -------- --------

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Net unrealized (depreciation) appreciation
on investments:
Balance at beginning of period............. 169.2 209.3 131.4
(Depreciation) appreciation during the
period:
Net (depreciation) appreciation on
available-for-sale securities.......... (298.2) (82.4) 170.9
Benefit (provision) for deferred federal
income taxes........................... 105.0 28.9 (59.8)
Minority interest........................ 31.8 13.4 (33.2)
-------- -------- --------
Distribution of subsidiaries (Note 3)...... (22.7) -- --
-------- -------- --------
(184.1) (40.1) 77.9
-------- -------- --------
Balance at end of period................... (14.9) 169.2 209.3
-------- -------- --------
RETAINED EARNINGS
Balance at beginning of period............. 1,698.3 1,567.4 1,367.4
Net income................................. 200.4 180.9 200.0
Dividend to shareholder.................... -- (50.0) --
Distribution of subsidiaries (Note 3)...... (1,251.4) -- --
-------- -------- --------
Balance at end of period................... 647.3 1,698.3 1,567.4
-------- -------- --------
Total shareholder's equity............. $1,206.4 $2,316.5 $2,235.4
======== ======== ========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-3
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
------------- ------- ------- ------
<S> <C> <C> <C>
Net income.................................. $ 200.4 $ 180.9 $200.0
Other comprehensive (loss) income:
Net (depreciation) appreciation on
available-for-sale securities......... (298.2) (82.4) 170.9
Benefit (provision) for deferred federal
income taxes.......................... 105.0 28.9 (59.8)
Minority interest....................... 31.8 13.4 (33.2)
Distribution of subsidiaries (Note 3)... (22.7) -- --
------- ------- ------
Other comprehensive (loss) income... (184.1) (40.1) 77.9
------- ------- ------
Comprehensive (loss) income................. $ (16.3) $ 140.8 $277.9
======= ======= ======
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-4
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
------------- --------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.............................. $ 200.4 $ 180.9 $ 200.0
Adjustments to reconcile net income to
net cash provided by operating
activities:
Minority interest................... 39.9 55.0 79.4
Net realized gains.................. (100.9) (62.7) (77.8)
Net amortization and depreciation... 31.5 20.7 31.6
Deferred federal income taxes....... 20.7 (15.4) 14.2
Sales practice litigation expense... -- 31.0 --
Loss from exiting reinsurance
pools............................. -- 25.3 --
Payment related to exiting
reinsurance pools................. -- (30.3) --
Loss from cession of disability
income business................... -- -- 53.9
Payment related to cession of
disability income business........ -- -- (207.0)
Loss from disposal of group life and
health business................... 30.5 -- --
Change in deferred acquisition
costs............................. (181.6) (185.8) (189.7)
Change in premiums and notes
receivable, net of reinsurance
payable........................... (41.8) 56.7 (15.1)
Change in accrued investment
income............................ 8.3 0.8 7.1
Change in policy liabilities and
accruals, net..................... (15.6) 168.1 (134.9)
Change in reinsurance receivable.... (46.3) (115.4) 27.2
Change in expenses and taxes
payable........................... 79.4 (3.3) 49.4
Separate account activity, net...... 5.5 (48.5) --
Other, net.......................... 18.5 (63.8) 20.4
--------- --------- ---------
Net cash provided by (used in)
operating activities.......... 48.5 13.3 (141.3)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposals and
maturities of available-for-sale
fixed maturities.................. 2,801.0 1,715.2 2,892.9
Proceeds from disposals of equity
securities........................ 422.9 285.3 162.7
Proceeds from disposals of other
investments....................... 30.3 120.8 116.3
Proceeds from mortgages matured or
collected......................... 131.2 171.2 204.7
Purchase of available-for-sale fixed
maturities........................ (2,227.3) (2,374.5) (2,596.0)
Purchase of equity securities....... (78.9) (119.9) (67.0)
Purchase of other investments....... (140.6) (274.4) (175.0)
Capital expenditures................ (29.2) (22.3) (15.3)
Purchase of minority interest in
Citizens Corporation.............. -- (195.9) --
Distribution of subsidiaries........ (202.2) -- --
Other investing activities, net..... -- 26.7 1.3
--------- --------- ---------
Net cash provided by (used in)
investing activities.......... 707.2 (667.8) 524.6
--------- --------- ---------
</TABLE>

F-5
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Deposits and interest credited to
contractholder deposit funds...... 1,514.6 1,419.2 457.6
Withdrawals from contractholder
deposit funds..................... (2,037.5) (625.0) (647.1)
Change in trust agreements supported
by funding agreements............. 50.6 -- --
Change in short-term debt........... (180.9) 188.3 (5.4)
Change in long-term debt............ -- (2.6) (0.1)
Dividend paid to shareholder........ -- (50.0) (9.4)
Contribution from parent............ 36.0 -- 0.1
Subsidiary treasury stock purchased,
at cost........................... (350.0) (1.0) (140.0)
--------- --------- ---------
Net cash (used in) provided by
financing activities.......... (967.2) 928.9 (344.3)
--------- --------- ---------
Net change in cash and cash equivalents..... (211.5) 274.4 39.0
Net change in cash held in the Closed
Block...................................... (13.2) 15.7 (1.0)
Cash and cash equivalents, beginning of
period..................................... 504.0 213.9 175.9
--------- --------- ---------
Cash and cash equivalents, end of period.... $ 279.3 $ 504.0 $ 213.9
========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid........................... $ 3.1 $ 7.3 $ 3.6
Income taxes paid....................... $ 24.0 $ 135.3 $ 66.3
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

F-6
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

First Allmerica Financial Life Insurance Company ("FAFLIC" or the "Company") is
organized as a stock life insurance company, and is a wholly-owned subsidiary of
Allmerica Financial Corporation ("AFC").

Prior to July 1, 1999, the consolidated financial statements of FAFLIC included
the accounts of its wholly-owned life insurance subsidiary Allmerica Financial
Life Insurance and Annuity Company ("AFLIAC"), its non-insurance subsidiaries
(principally brokerage and investment advisory services), Allmerica Property and
Casualty Companies, Inc. ("Allmerica P&C") (an 85.0%-owned non-insurance holding
company), and various other non-insurance subsidiaries.

Effective July 1, 1999, AFC made certain changes to its corporate structure
(Note 3). These changes included the transfer of the Company's ownership of
Allmerica P&C and its subsidiaries, as well as several other non-insurance
subsidiaries from the Company to AFC. In exchange, AFC contributed capital to
the Company and agreed to maintain the Company's statutory surplus at specified
levels during the following 6 years. Comparability between current and prior
period financial statements and footnotes has been significantly impacted by the
Company's divestiture of these subsidiaries during 1999, as disclosed in Note 3.

The Closed Block (Note 1B) assets and liabilities at December 31, 1999 and 1998
are presented in the consolidated balance sheets as single line items. The
contribution from the Closed Block is included in the consolidated statements of
income in other income. Unless specifically stated, all disclosures contained
herein supporting the consolidated financial statements at December 31, 1999,
1998 and 1997, and the years then ended exclude the Closed Block related
amounts. All significant intercompany accounts and transactions have been
eliminated.

On or about December 3, 1998, the Company acquired all of the outstanding common
stock of Citizens Corporation (formerly an 82.5% owned non-insurance subsidiary
of The Hanover Insurance Company ("Hanover"), a wholly-owned subsidiary of
Allmerica P&C) that it did not already own in exchange for cash of $195.9
million (Note 4). The acquisition has been recognized as a purchase. The
minority interest acquired totaled $158.5 million. A total of $40.8 million
representing the excess of the purchase price over the fair values of the net
assets acquired, net of deferred taxes, has been allocated to goodwill and is
being amortized over a 40-year period.

Prior to the July 1, 1999 changes in AFC's corporate structure, minority
interest relates to the Company's investment in Allmerica P&C and its only
significant subsidiary, Hanover. Hanover's wholly-owned subsidiary is Citizens
Corporation, the holding company for Citizens. Minority interest also includes
an amount related to the minority interest in Citizens Corporation.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

B. CLOSED BLOCK

The Company established and began operating a closed block ("the Closed Block")
for the benefit of the participating policies included therein, consisting of
certain individual life insurance participating policies,

F-7
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

individual deferred annuity contracts and supplementary contracts not involving
life contingencies which were in force as of FAFLIC's demutualization on
October 16, 1995; such policies constitute the "Closed Block Business". The
purpose of the Closed Block is to protect the policy dividend expectations of
such FAFLIC dividend paying policies and contracts. Unless the Commonwealth of
Massachusetts Insurance Commissioner ("the Insurance Commissioner") consents to
an earlier termination, the Closed Block will continue to be in effect until the
date none of the Closed Block policies are in force. FAFLIC allocated to the
Closed Block assets in an amount that is expected to produce cash flows which,
together with future revenues from the Closed Block Business, are reasonably
sufficient to support the Closed Block Business, including provision for payment
of policy benefits, certain future expenses and taxes and for continuation of
policyholder dividend scales payable in 1994 so long as the experience
underlying such dividend scales continues. The Company expects that the factors
underlying such experience will fluctuate in the future and policyholder
dividend scales for Closed Block Business will be set accordingly.

Although the assets and income allocated to the Closed Block inure solely to the
benefit of the holders of policies included in the Closed Block, the excess of
Closed Block liabilities over Closed Block assets as measured on a GAAP basis
represent the expected future post-tax income from the Closed Block which may be
recognized in income over the period the policies and contracts in the Closed
Block remain in force.

If the actual income from the Closed Block in any given period equals or exceeds
the expected income for such period as determined at the inception of the Closed
Block, the expected income would be recognized in income for that period.
Further, any excess of the actual income over the expected income would also be
recognized in income to the extent that the aggregate expected income for all
prior periods exceeded the aggregate actual income. Any remaining excess of
actual income over expected income would be accrued as a liability for
policyholder dividends in the Closed Block to be paid to the Closed Block
policyholders. This accrual for future dividends effectively limits the actual
Closed Block income recognized in income to the Closed Block income expected to
emerge from operation of the Closed Block as determined at inception.

If, over the period the policies and contracts in the Closed Block remain in
force, the actual income from the Closed Block is less than the expected income
from the Closed Block, only such actual income (which could reflect a loss)
would be recognized in income. If the actual income from the Closed Block in any
given period is less than the expected income for that period and changes in
dividends scales are inadequate to offset the negative performance in relation
to the expected performance, the income inuring to shareholders of the Company
will be reduced. If a policyholder dividend liability had been previously
established in the Closed Block because the actual income to the relevant date
had exceeded the expected income to such date, such liability would be reduced
by this reduction in income (but not below zero) in any periods in which the
actual income for that period is less than the expected income for such period.

C. VALUATION OF INVESTMENTS

In accordance with the provisions of Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
("Statement No. 115"), the Company is required to classify its investments into
one of three categories: held-to-maturity, available-for-sale or trading. The
Company determines the appropriate classification of debt securities at the time
of purchase and reevaluates such designation as of each balance sheet date.

Debt securities and marketable equity securities are classified as
available-for-sale. Available-for-sale securities are carried at fair value,
with the unrealized gains and losses, net of tax, reported as a separate
component of shareholders' equity. The amortized cost of debt securities is
adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization is included in investment income.

F-8
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Mortgage loans on real estate are stated at unpaid principal balances, net of
unamortized discounts and reserves. Reserves on mortgage loans are based on
losses expected by the Company to be realized on transfers of mortgage loans to
real estate (upon foreclosure), on the disposition or settlement of mortgage
loans and on mortgage loans which the Company believes may not be collectible in
full. In establishing reserves, the Company considers, among other things, the
estimated fair value of the underlying collateral.

Fixed maturities and mortgage loans that are delinquent are placed on
non-accrual status, and thereafter interest income is recognized only when cash
payments are received.

Policy loans are carried principally at unpaid principal balances.

During 1997, the Company adopted a plan to dispose of all real estate assets. As
of December 31, 1999, there were 2 properties remaining in the Company's real
estate portfolio, both of which are being actively marketed. These assets are
carried at the estimated fair value less costs of disposal. Depreciation is not
recorded on these assets while they are held for disposal.

Realized investment gains and losses, other than those related to separate
accounts for which the Company does not bear the investment risk, are reported
as a component of revenues based upon specific identification of the investment
assets sold. When an other than temporary impairment of the value of a specific
investment or a group of investments is determined, a realized investment loss
is recorded. Changes in the valuation allowance for mortgage loans are included
in realized investment gains or losses.

D. FINANCIAL INSTRUMENTS

In the normal course of business, the Company enters into transactions involving
various types of financial instruments, including debt, investments such as
fixed maturities, mortgage loans and equity securities, investment and loan
commitments, swap contracts and interest rate futures contracts. These
instruments involve credit risk and also may be subject to risk of loss due to
interest rate fluctuation. The Company evaluates and monitors each financial
instrument individually and, when appropriate, obtains collateral or other
security to minimize losses.

Derivative financial instruments are accounted for under three different
methods: fair value accounting, deferral accounting and accrual accounting.
Interest rate swap contracts used to hedge interest rate risk are accounted for
using a combination of the fair value method and accrual method, with changes in
fair value reported in unrealized gains and losses in equity consistent with the
underlying hedged security, and the net payment or receipt on the swaps reported
in net investment income. Foreign currency swap contracts used to hedge the
foreign currency exchange risk associated with investment securities are
accounted for using a combination of the fair value method and accrual method,
with changes in fair value reported in unrealized gains and losses in equity
consistent with the underlying hedged security, and the net payment or receipt
on the swaps reported in net investment income. Foreign currency swap contracts
used to hedge foreign currency exchange risk associated with funding agreements
are accounted for using the fair value method, with changes in fair value
reported in other operating income consistent with the underlying hedged trust
obligation liability. Futures contracts used to hedge interest rate risk are
accounted for using the deferral method, with gains and losses deferred in
unrealized gains and losses in equity and recognized in earnings in conjunction
with the earnings recognition of the underlying hedged item. Default swap
contracts entered into for investment purposes are accounted for using the fair
value method, with changes in fair value, if any, reported in realized
investment gains and losses in earnings. Premium paid to the Company on default
swap contracts is reported in net investment income in earnings. Other swap
contracts entered into for investment purposes are accounted for using the fair
value method, with changes in fair value reported in realized investment gains
and

F-9
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

losses in earnings. Any ineffective swaps or futures hedges are recognized
currently in realized investment gains and losses in earnings.

E. CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less.

F. DEFERRED POLICY ACQUISITION COSTS

Acquisition costs consist of commissions, underwriting costs and other costs,
which vary with, and are primarily related to, the production of revenues.
Property and casualty, group life and group health insurance business
acquisition costs are deferred and amortized over the terms of the insurance
policies. Acquisition costs related to universal life products, variable
annuities and contractholder deposit funds are deferred and amortized in
proportion to total estimated gross profits from investment yields, mortality,
surrender charges and expense margins over the expected life of the contracts.
This amortization is reviewed annually and adjusted retrospectively when the
Company revises its estimate of current or future gross profits to be realized
from this group of products, including realized and unrealized gains and losses
from investments. Acquisition costs related to fixed annuities and other life
insurance products are deferred and amortized, generally in proportion to the
ratio of annual revenue to the estimated total revenues over the contract
periods based upon the same assumptions used in estimating the liability for
future policy benefits.

Deferred acquisition costs for each life product and property and casualty line
of business are reviewed to determine if they are recoverable from future
income, including investment income. If such costs are determined to be
unrecoverable, they are expensed at the time of determination. Although
realization of deferred policy acquisition costs is not assured, the Company
believes it is more likely than not that all of these costs will be realized.
The amount of deferred policy acquisition costs considered realizable, however,
could be reduced in the near term if the estimates of gross profits or total
revenues discussed above are reduced. The amount of amortization of deferred
policy acquisition costs could be revised in the near term if any of the
estimates discussed above are revised.

G. PROPERTY AND EQUIPMENT

Property, equipment and leasehold improvements are stated at cost, less
accumulated depreciation and amortization. Depreciation is provided using the
straight-line or accelerated method over the estimated useful lives of the
related assets which generally range from 3 to 30 years. Amortization of
leasehold improvements is provided using the straight-line method over the
lesser of the term of the leases or the estimated useful life of the
improvements.

H. SEPARATE ACCOUNTS

Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the benefit of certain pension, variable annuity
and variable life insurance contractholders. Assets consist principally of
bonds, common stocks, mutual funds, and short-term obligations at market value.
The investment income, gains and losses of these accounts generally accrue to
the contractholders and, therefore, are not included in the Company's net
income. Appreciation and depreciation of the Company's interest in the separate
accounts, including undistributed net investment income, is reflected in
shareholder's equity or net investment income.

F-10
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

I. POLICY LIABILITIES AND ACCRUALS

Future policy benefits are liabilities for life, health and annuity products.
Such liabilities are established in amounts adequate to meet the estimated
future obligations of policies in force. The liabilities associated with
traditional life insurance products are computed using the net level premium
method for individual life and annuity policies, and are based upon estimates as
to future investment yield, mortality and withdrawals that include provisions
for adverse deviation. Future policy benefits for individual life insurance and
annuity policies are computed using interest rates ranging from 2 1/2% to 6.0%
for life insurance and 2% to 9 1/2% for annuities. Estimated liabilities are
established for group life and health policies that contain experience rating
provisions. Mortality, morbidity and withdrawal assumptions for all policies are
based on the Company's own experience and industry standards. Liabilities for
universal life, variable universal life and variable annuities include deposits
received from customers and investment earnings on their fund balances, less
administrative charges. Universal life fund balances are also assessed mortality
and surrender charges. Liabilities for variable annuities include a reserve for
benefit claims in excess of a guaranteed minimum fund value.

Liabilities for outstanding claims, losses and loss adjustment expenses ("LAE")
are estimates of payments to be made on property and casualty and health
insurance for reported losses and LAE and estimates of losses and LAE incurred
but not reported. These liabilities are determined using case basis evaluations
and statistical analyses and represent estimates of the ultimate cost of all
losses incurred but not paid. These estimates are continually reviewed and
adjusted as necessary; such adjustments are reflected in current operations.
Estimated amounts of salvage and subrogation on unpaid property and casualty
losses are deducted from the liability for unpaid claims.

Premiums for property and casualty insurance are reported as earned on a
pro-rata basis over the contract period. The unexpired portion of these premiums
is recorded as unearned premiums.

Contractholder deposit funds and other policy liabilities include
investment-related products such as guaranteed investment contracts ("GICs"),
deposit administration funds and immediate participation guarantee funds and
consist of deposits received from customers and investment earnings on their
fund balances.

All policy liabilities and accruals are based on the various estimates discussed
above. Although the adequacy of these amounts cannot be assured, the Company
believes that it is more likely than not that policy liabilities and accruals
will be sufficient to meet future obligations of policies in force. The amount
of liabilities and accruals, however, could be revised in the near term if the
estimates discussed above are revised.

J. PREMIUM AND FEE REVENUE AND RELATED EXPENSES

Premiums for individual life and health insurance and individual and group
annuity products, excluding universal life and investment-related products, are
considered revenue when due. Property and casualty insurance premiums are
recognized as revenue over the related contract periods. Benefits, losses and
related expenses are matched with premiums, resulting in their recognition over
the lives of the contracts. This matching is accomplished through the provision
for future benefits, estimated and unpaid losses and amortization of deferred
policy acquisition costs. Revenues for investment-related products consist of
net investment income and contract charges assessed against the fund values.
Related benefit expenses include annuity benefit claims in excess of a
guaranteed minimum fund value, and net investment income credited to the fund
values after deduction for investment and risk charges. Revenues for universal
life products consist of net investment income, with mortality, administration
and surrender charges assessed against the fund values. Related benefit expenses
include universal life benefit claims in excess of fund values and net
investment income credited to universal life fund values. Certain policy charges
that represent compensation for services

F-11
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

to be provided in future periods are deferred and amortized over the period
benefited using the same assumptions used to amortize capitalized acquisition
costs.

K. FEDERAL INCOME TAXES

AFC and its domestic subsidiaries (including certain non-insurance operations)
file a consolidated United States federal income tax return. Entities included
within the consolidated group are segregated into either a life insurance or
non-life insurance company subgroup. The consolidation of these subgroups is
subject to certain statutory restrictions on the percentage of eligible non-life
tax losses that can be applied to offset life company taxable income. Prior to
the merger on July 16, 1997, Allmerica P&C and its subsidiaries filed a separate
United States federal income tax return.

The Board of Directors has delegated to AFC management, the development and
maintenance of appropriate federal income tax allocation policies and
procedures, which are subject to written agreement between the companies. The
Federal income tax for all subsidiaries in the consolidated return of AFC is
calculated on a separate return basis. Any current tax liability is paid to AFC.
Tax benefits resulting from taxable operating losses or credits of AFC's
subsidiaries are not reimbursed to the subsidiary until such losses or credits
can be utilized by the subsidiary on a separate return basis.

Deferred income taxes are generally recognized when assets and liabilities have
different values for financial statement and tax reporting purposes, and for
other temporary taxable and deductible differences as defined by Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("Statement No. 109"). These differences result primarily from loss and LAE
reserves, policy reserves, policy acquisition expenses, and unrealized
appreciation or depreciation on investments.

L. NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement No. 133"), which establishes
accounting and reporting standards for derivative instruments. Statement No. 133
requires that an entity recognize all derivatives as either assets or
liabilities at fair value in the statement of financial position, and
establishes special accounting for the following three types of hedges: fair
value hedges, cash flow hedges, and hedges of foreign currency exposures of net
investments in foreign operations. This statement is effective for fiscal years
beginning after June 15, 2000. The Company is currently assessing the impact of
the adoption of Statement No. 133.

In March 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position 98-1, "Accounting for the Cost of Computer Software
Developed or Obtained for Internal Use" ("SoP 98-1"). SoP 98-1 requires that
certain costs incurred in developing internal-use computer software be
capitalized and provides guidance for determining whether computer software is
to be considered for internal use. This statement is effective for fiscal years
beginning after December 15, 1998. In the second quarter of 1998, the Company
adopted SoP 98-1 effective January 1, 1998, resulting in an increase in pre-tax
income of $12.4 million through December 31, 1998. The adoption of SOP 98-1 did
not have a material effect on the results of operations or financial position
for the three months ended March 31, 1998.

In December 1997, the AICPA issued Statement of Position 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments" ("SoP 97-3").
SoP 97-3 provides guidance on when a liability should be recognized for guaranty
fund and other assessments and how to measure the liability. This statement
allows for the discounting of the liability if the amount and timing of the cash
payments are fixed

F-12
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

and determinable. In addition, it provides criteria for when an asset may be
recognized for a portion or all of the assessment liability or paid assessment
that can be recovered through premium tax offsets or policy surcharges. This
statement is effective for fiscal years beginning after December 15, 1998. The
adoption of this statement did not have a material effect on the results of
operations or financial position of the Company.

In June 1997, the FASB issued Statement No. 131, "Disclosures About Segments of
an Enterprise and Related Information" ("Statement No. 131"). This statement
establishes standards for the way that public enterprises report information
about operating segments in annual financial statements and requires that
selected information about those operating segments be reported in interim
financial statements. This statement supersedes Statement No. 14, "Financial
Reporting for Segments of a Business Enterprise". Statement No. 131 requires
that all public enterprises report financial and descriptive information about
their reportable operating segments. Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. This statement
is effective for fiscal years beginning after December 15, 1997. The Company
adopted Statement No. 131 for the first quarter of 1998, which resulted in
certain segment re-definitions, which have no impact on the consolidation
results of operations (See Note 15).

In June 1997, the FASB also issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("Statement No. 130"). Statement
No. 130 establishes standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose financial statements.
All items that are required to be recognized under accounting standards as
components of comprehensive income are to be reported in a financial statement
that is displayed with the same prominence as other financial statements. This
statement stipulates that comprehensive income reflect the change in equity of
an enterprise during a period from transactions and other events and
circumstances from non-owner sources. This statement is effective for fiscal
years beginning after December 15, 1997. The Company adopted Statement No. 130
for the first quarter of 1998, which resulted primarily in reporting unrealized
gains and losses on investments in debt and equity securities in comprehensive
income.

M. RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year
presentation, resulting primarily from the reporting of Discontinued Operations
as disclosed in Note 2.

2. DISCONTINUED OPERATIONS

During the second quarter of 1999, the Company approved a plan to exit its group
life and health insurance business, consisting of its Employee Benefit Services
("EBS") business, its Affinity Group Underwriters ("AGU") business and its
accident and health assumed reinsurance pool business ("reinsurance pool
business"). During the third quarter of 1998, the Company ceased writing new
premium in the reinsurance pool business, subject to certain contractual
obligations. Prior to 1999, these businesses comprised substantially all of the
former Corporate Risk Management Services segment. Accordingly, the operating
results of the discontinued segment, including its reinsurance pool business,
have been reported in the Consolidated Statements of Income as discontinued
operations in accordance with Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations -- Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions" ("APB Opinion No. 30"). In the third quarter of 1999,
the operating results from the discontinued segment were adjusted to reflect the
recording of additional reserves related to accident claims from prior years. On
October 6, 1999, the Company entered into an agreement with Great-West Life and
Annuity Insurance Company of Denver,

F-13
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

which provides for the sale of the Company's EBS business effective March 1,
2000. The Company has recorded a $30.5 million loss, net of taxes, on the
disposal of its group life and health business. Subsequent to the June 30, 1999
measurement date, operations from the discontinued business generated losses of
approximately $8.7 million, net of taxes.

As permitted by APB Opinion No. 30, the Consolidated Balance Sheets have not
been segregated between continuing and discontinued operations. At December 31,
1999, the discontinued segment had assets of approximately $531.1 million
consisting primarily of invested assets, premiums and fees receivable, and
reinsurance recoverables, and liabilities of approximately $482.5 million
consisting primarily of policy liabilities. Revenues for the discontinued
operations were $361.1 million, $398.5 million, and $389.2 million for the years
ended December 31, 1999, 1998 and 1997, respectively.

3. REORGANIZATION OF AFC CORPORATE STRUCTURE

AFC has made certain changes to its corporate structure effective July 1, 1999.
These changes included transfer of the Company's ownership of Allmerica P&C and
all of its subsidiaries, as well as certain other non-insurance subsidiaries,
from FAFLIC to AFC, referred to as the "distribution of subsidiaries". The
Company retained its ownership of its primary insurance subsidiary, AFLIAC and
certain broker dealer and investment management and advisory subsidiaries. AFC
contributed capital to FAFLIC in the amount of $125.0 million, consisting of
cash and securities of $36.0 million and $89.0 million, respectively, and agreed
to maintain the Company's statutory surplus at specified levels during the
following six years. In addition, any dividend from FAFLIC to AFC during 2000
and 2001 requires the prior approval of the Commonwealth of Massachusetts
Insurance Commissioner. This transaction was approved by the Commissioner on
May 24, 1999.

The equity of the subsidiaries transferred from FAFLIC on July 1, 1999 was
$1,274.1 million. As of June 30, 1999, the transferred subsidiaries had total
assets of $5,334.1 million, including cash and cash equivalents of $202.2
million, and total revenue of $1,196.5 million.

The Company's consolidated results of operations in 1999 include $107.2 million
of net income associated with these subsidiaries through June 30, 1999. The
unaudited pro forma information below presents consolidated results of
operations as if the reorganization had occurred at the beginning of 1998.

The following unaudited pro forma information is not necessarily indicative of
the consolidated results of operations of the Company had the transfer occurred
at the beginning of 1998, nor is it necessarily indicative of future results.

<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998
- ------------- ------ ------
<S> <C> <C>
Revenue..................................................... $828.0 $750.2
====== ======
Net realized capital (losses) gains included in revenue..... (11.8) 19.6
====== ======
Income from continuing operations before taxes.............. 192.1 141.2
Income taxes................................................ 51.2 41.2
------ ------
Net income from continuing operations....................... $140.9 100.0
(Loss) from operations of discontinued business (less
applicable income taxes (benefit) of $(10.4), $(7.0) and
$8.9 for the years ended December 31, 1999, 1998 and 1997,
respectively............................................... (17.2) (13.5)
</TABLE>

F-14
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998
- ------------- ------ ------
<S> <C> <C>
(Loss) on disposal of group life and health business,
including provision of $72.2 for operating losses during
phase-out period for the tear ended December 31, 1999 (less
applicable income tax benefit of $16.4).................... (30.5) --
------ ------
Net income.................................................. $ 93.2 $ 86.5
====== ======
</TABLE>

4. ACQUISITION OF MINORITY INTEREST OF CITIZENS CORPORATION

On December 3, 1998 Citizens Acquisition Corporation, a wholly-owned subsidiary
of the Allmerica P&C, completed a cash tender offer to acquire the outstanding
shares of Citizens Corporation common stock that AFC or its subsidiaries did not
already own at a price of $33.25 per share. Approximately 99.8% of publicly held
shares of Citizens Corporation common stock were tendered. On December 14, 1998,
the Company completed a short-form merger, acquiring all shares of common stock
of Citizens Corporation not purchased in its tender offer, through the merger of
its wholly-owned subsidiary, Citizens Acquisition Corporation with Citizens
Corporation at a price of $33.25 per share. Total consideration for the
transactions amounted to $195.9 million. The acquisition has been recognized as
a purchase. The minority interest acquired totaled $158.5 million. A total of
$40.8 million representing the excess of the purchase price over the fair values
of the net assets acquired, net of deferred taxes, has been allocated to
goodwill and is being amortized over a 40-year period.

The Company's consolidated results of operations include minority interest in
Citizens Corporation prior to December 3, 1998. The unaudited pro forma
information below presents consolidated results of operation as if the
acquisition had occurred at the beginning of 1997.

The following unaudited pro forma information is not necessarily indicative of
the consolidated results of operations of the combined Company had the
acquisition occurred at the beginning of 1997, nor is it necessarily indicative
of future results.

<TABLE>
<CAPTION>
(UNAUDITED)
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1998 1997
- ------------- -------- --------
<S> <C> <C>
Revenue..................................................... $3,006.6 $2,977.1
======== ========
Net realized capital gains included in revenue.............. $ 58.1 $ 71.6
======== ========
Income before taxes and minority interest................... 293.4 332.5
Income taxes................................................ (54.2) (82.4)
Minority Interest:
Equity in earnings........................................ (42.6) (64.1)
-------- --------
Net income.................................................. $ 196.6 $ 186.0
======== ========
</TABLE>

5. OTHER SIGNIFICANT TRANSACTIONS

Effective January 1, 1999, Allmerica P&C entered into a whole account aggregate
excess of loss reinsurance agreement with a highly rated reinsurer. The
reinsurance agreement provides accident year coverage for the three years 1999
to 2001 for the Company's property and casualty business, and is subject to
cancellation or commutation annually at the Company's option. The program covers
losses and allocated loss adjustment

F-15
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

expenses, including those incurred but not yet reported, in excess of a
specified whole account loss and allocated LAE ratio. The annual and aggregate
coverage limits for losses and allocated LAE are $150.0 million and $300.0
million, respectively. The effect of this agreement on results of operations in
each reporting period is based on losses and allocated LAE ceded, reduced by a
sliding scale premium of 50.0-67.0% depending on the size of the loss, and
increased by a ceding commission of 20.0% of ceded premium. In addition, net
investment income is reduced for amounts credited to the reinsurer. Prior to the
AFC corporate reorganization, the Company recognized a net benefit of $16.9
million as a result of this agreement, based on year-to-date and annual
estimates of losses and allocated loss adjustment expenses for accident year
1999.

On October 29, 1998, the Company announced that it had adopted a formal
restructuring plan for its Risk Management business. As part of this initiative,
the segment consolidated its property and casualty field support activities from
fourteen regional branches into three hub locations. As a result of the
Company's restructuring initiative, it recognized a pretax loss of $9.0 million,
in the fourth quarter of 1998.

Approximately $4.8 million of this loss relates to severance and other employee
related costs resulting from the elimination of 306 positions, of which 207 and
106 employees had been terminated as of December 31, 1999 and 1998,
respectively. In addition, lease cancellations and contract terminations
resulted in losses of approximately $2.5 million and $1.7 million, respectively.
The Company made payments of approximately $4.2 million and $0.1 million through
June 30, 1999 and in 1998, respectively, related to this restructuring
initiative.

Effective July 1, 1998, the Company entered into a reinsurance agreement with a
highly rated reinsurer that cedes current and future underwriting losses,
including unfavorable development of prior year reserves, up to a $40.0 million
maximum, relating to the Company's reinsurance pool business. These pools
consist primarily of the Company's assumed stop loss business, small group
managed care pools, long-term disability and long-term care pools, student
accident and special risk business. The agreement is consistent with
management's decision to exit this line of business, which the Company expects
to run-off over the next three years. As a result of this transaction, the
Company recognized a $25.3 million pre-tax loss in the third quarter of 1998.
This loss is reported in 1999 as part of the discontinued operations of the
Company.

Effective January 1, 1998, the Company entered into an agreement with a highly
rated reinsurer to reinsure the mortality risk on substantially all of the
universal life and variable universal life blocks of business. The agreement did
not have a material effect on its results of operations or financial position.

In 1999, 1998 and 1997, Allmerica P&C redeemed 8,662.7, 3,289.5 and 5,735.3
shares, respectively, of its issued and outstanding common stock owned by AFC
for $350.0 million, $125.0 million and $195.0 million, respectively, thereby
increasing the Company's total ownership to 84.5% as of June 30, 1999. The
increases in the Company's ownership of Allmerica P&C through June 30, 1999, and
for 1998 and 1997 were 14.5%, 4.3% and 6.3%, respectively. The 1999 transaction
consisted of cash and cash equivalents. The 1998 transaction consisted of $124.0
million of securities and $1.0 million of cash. The 1997 transaction consisted
of $55.0 million of securities and $140.0 million of cash.

The merger of Allmerica P&C and a wholly-owned subsidiary of AFC was consummated
on July 16, 1997. Through the merger, AFC acquired all of the outstanding common
stock of Allmerica P&C that FAFLIC did not already own in exchange for cash of
$425.6 million and approximately 9.7 million shares of AFC stock valued at
$372.5 million. At consummation of this transaction AFC owned 59.5% through
FAFLIC and 40.5% directly. The merger has been recognized as a purchase. Total
consideration of approximately $798.1 million

F-16
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

has been allocated to the minority interest in the assets and liabilities based
on estimates of their fair values. The minority interest acquired totaled $703.5
million. A total of $90.6 million representing the excess of the purchase price
over the fair values of the net assets acquired, net of deferred taxes, has been
allocated to goodwill and is being amortized over a 40-year period.

On April 14, 1997, the Company entered into an agreement in principle to cede
substantially all of the Company's individual disability income line of business
under a 100% coinsurance agreement with a highly rated reinsurer. The
coinsurance agreement became effective October 1, 1997. The transaction has
resulted in the recognition of a $53.9 million pre-tax loss in the first quarter
of 1997.

6. INVESTMENTS

A. SUMMARY OF INVESTMENTS

The Company accounts for its investments, all of which are classified as
available-for-sale, in accordance with Statement No. 115.

The amortized cost and fair value of available-for-sale fixed maturities and
equity securities were as follows:

<TABLE>
<CAPTION>
1999
-------------------------------------------
GROSS GROSS
DECEMBER 31, AMORTIZED UNREALIZED UNREALIZED FAIR
(IN MILLIONS) COST (1) GAINS LOSSES VALUE
- ------------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
U.S. Treasury securities and U.S.
government and agency securities....... $ 62.6 $ 1.0 $ 0.5 $ 63.1
States and political subdivisions....... 13.5 0.1 0.1 13.5
Foreign governments..................... 80.0 2.1 0.1 82.0
Corporate fixed maturities.............. 3,206.5 63.2 116.9 3,152.8
Mortgage-backed securities.............. 359.0 1.3 11.0 349.3
-------- ------ ------ --------
Total fixed maturities.................. $3,721.6 $ 67.7 $128.6 $3,660.7
======== ====== ====== ========
Equity securities....................... $ 27.9 $ 24.7 $ 1.2 $ 51.4
======== ====== ====== ========
</TABLE>

<TABLE>
<CAPTION>
1998
-------------------------------------------
GROSS GROSS
DECEMBER 31, AMORTIZED UNREALIZED UNREALIZED FAIR
(IN MILLIONS) COST (1) GAINS LOSSES VALUE
- ------------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C>
U.S. Treasury securities and U.S.
government and agency securities....... $ 192.8 $ 12.0 $ 24.5 $ 180.3
States and political subdivisions....... 2,408.9 83.0 5.2 2,486.7
Foreign governments..................... 107.9 7.7 4.5 111.1
Corporate fixed maturities.............. 4,293.3 167.8 81.9 4,379.2
Mortgage-backed securities.............. 517.9 11.5 2.8 526.6
-------- ------ ------ --------
Total fixed maturities.................. $7,520.8 $282.0 $118.9 $7,683.9
======== ====== ====== ========
Equity securities....................... $ 253.1 $151.1 $ 7.1 $ 397.1
======== ====== ====== ========
</TABLE>

(1) Amortized cost for fixed maturities and cost for equity securities.

F-17
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In connection with AFLIAC's voluntary withdrawal of its license in New York,
AFLIAC agreed with the New York Department of Insurance to maintain, through a
custodial account in New York, a security deposit, the market value of which
will at all times equal 102% of all outstanding general account liabilities of
AFLIAC for New York policyholders, claimants and creditors. At December 31,
1999, the amortized cost and market value of these assets on deposit in New York
were $196.4 million and $193.0 million, respectively. At December 31, 1998, the
amortized cost and market value of assets on deposit were $268.5 million and
$284.1 million, respectively. In addition, fixed maturities, excluding those
securities on deposit in New York, with an amortized cost of $18.3 million and
$105.4 million were on deposit with various state and governmental authorities
at December 31, 1999 and 1998, respectively.

There were no contractual fixed maturity investment commitments at December 31,
1999.

The amortized cost and fair value by maturity periods for fixed maturities are
shown below. Actual maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties, or the Company may have the right to put or sell the
obligations back to the issuers. Mortgage backed securities are included in the
category representing their ultimate maturity.

<TABLE>
<CAPTION>
1999
-------------------
DECEMBER 31, AMORTIZED FAIR
(IN MILLIONS) COST VALUE
- ------------- --------- --------
<S> <C> <C>
Due in one year or less..................................... $ 224.4 $ 225.7
Due after one year through five years....................... 1,324.0 1,328.4
Due after five years through ten years...................... 1,409.1 1,369.9
Due after ten years......................................... 764.1 736.7
-------- --------
Total....................................................... $3,721.6 $3,660.7
======== ========
</TABLE>

Unrealized gains and losses on available-for-sale and other securities, are
summarized as follows:

<TABLE>
<CAPTION>
EQUITY
FOR THE YEARS ENDED DECEMBER 31, FIXED SECURITIES
(IN MILLIONS) MATURITIES AND OTHER (1) TOTAL
- ------------- ---------- ------------- ------
<S> <C> <C> <C>
1999
Net appreciation, beginning of year......................... $ 79.0 $ 90.2 $169.2
------ ------ ------
Net (depreciation) appreciation on available-for-sale
securities................................................. (254.4) (122.3) (376.7)
Net appreciation from the effect on deferred policy
acquisition costs and on policy liabilities................ 78.5 -- 78.5
Provision for deferred federal income taxes and minority
interest................................................... 72.1 64.7 136.8
Distribution of subsidiaries (See Note 3)................... (5.6) (17.1) (22.7)
------ ------ ------
(109.4) (74.7) (184.1)
------ ------ ------
Net appreciation, end of year............................... $(30.4) $ 15.5 $(14.9)
====== ====== ======
</TABLE>

F-18
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
EQUITY
FOR THE YEARS ENDED DECEMBER 31, FIXED SECURITIES
(IN MILLIONS) MATURITIES AND OTHER (1) TOTAL
- ------------- ---------- ------------- ------
<S> <C> <C> <C>
1998
Net appreciation, beginning of year......................... $122.6 $ 86.7 $209.3
------ ------ ------
Net (depreciation) appreciation on available-for-sale
securities................................................. (99.3) 4.4 (94.9)
Appreciation due to Allmerica P&C purchase of minority in
interest of Citizens....................................... 10.7 10.7 21.4
Net appreciation from the effect on deferred policy
acquisition costs and on policy liabilities................ 6.3 -- 6.3
Provision for deferred federal income taxes and minority
interest................................................... 38.7 (11.6) 27.1
------ ------ ------
(43.6) 3.5 (40.1)
------ ------ ------
Net appreciation, end of year............................... $ 79.0 $ 90.2 $169.2
====== ====== ======

1997
Net appreciation, beginning of year......................... $ 71.3 $ 60.1 $131.4
------ ------ ------
Net appreciation (depreciation) on available-for-sale
securities................................................. 83.2 (5.9) 77.3
Appreciation due to AFC purchase of minority interest of
Allmerica P&C.............................................. 50.7 59.6 110.3
Net depreciation from the effect on deferred policy
acquisition costs and on policy liabilities................ (16.7) -- (16.7)
Provision for deferred federal income taxes and minority
interest................................................... (65.9) (27.1) (93.0)
------ ------ ------
51.3 26.6 77.9
------ ------ ------
Net appreciation, end of year............................... $122.6 $ 86.7 $209.3
====== ====== ======
</TABLE>

(1) Includes net (depreciation) appreciation on other investments of $(1.1)
million, $0.8 million, and $1.8 million, in 1999, 1998, and 1997, respectively.

B. MORTGAGE LOANS AND REAL ESTATE

FAFLIC's mortgage loans are diversified by property type and location. Real
estate investments have been obtained primarily through foreclosure. Mortgage
loans are collateralized by the related properties and generally are no more
than 75% of the property's value at the time the original loan is made.

The carrying values of mortgage loans and real estate investments net of
applicable reserves were $533.6 million and $582.7 million at December 31, 1999
and 1998, respectively. Reserves for mortgage loans were $5.8 million and $11.5
million at December 31, 1999 and 1998, respectively.

During 1997, the Company committed to a plan to dispose of all real estate
assets. At December 31, 1999, there were 2 properties remaining in the Company's
real estate portfolio which are being actively marketed. Depreciation is not
recorded on these assets while they are held for disposal.

There were no non-cash investing activities, including real estate acquired
through foreclosure of mortgage loans, in 1999, 1998 and 1997.

There were no material contractual commitments to extend credit under commercial
mortgage loan agreements at December 31, 1999.

F-19
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Mortgage loans and real estate investments comprised the following property
types and geographic regions:

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS) 1999 1998
- ------------- ------ ------
<S> <C> <C>
Property type:
Office building........................................... $301.5 $304.4
Residential............................................... 50.3 52.8
Retail.................................................... 92.2 108.5
Industrial/warehouse...................................... 83.6 110.0
Other..................................................... 11.8 18.5
Valuation allowances...................................... (5.8) (11.5)
------ ------
Total....................................................... $533.6 $582.7
====== ======
Geographic region:
South Atlantic............................................ $132.2 $136.1
Pacific................................................... 133.6 155.1
East North Central........................................ 62.5 80.5
Middle Atlantic........................................... 50.3 61.2
West South Central........................................ 90.8 54.7
New England............................................... 40.7 60.7
Other..................................................... 29.3 45.9
Valuation allowances...................................... (5.8) (11.5)
------ ------
Total....................................................... $533.6 $582.7
====== ======
</TABLE>

At December 31, 1999, scheduled mortgage loan maturities were as follows: 2000
- -- $108.1 million; 2001 -- $33.9 million; 2002 -- $27.5 million; 2003 -- $40.6
million; 2004 -- $76.4 million; and $234.7 million thereafter. Actual maturities
could differ from contractual maturities because borrowers may have the right to
prepay obligations with or without prepayment penalties and loans may be
refinanced. During 1999, the Company did not refinance any mortgage loans based
on terms which differed from those granted to new borrowers.

C. INVESTMENT VALUATION ALLOWANCES

Investment valuation allowances which have been deducted in arriving at
investment carrying values as presented in the consolidated balance sheets and
changes thereto are shown below.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, BALANCE AT BALANCE AT
(IN MILLIONS) JANUARY 1 PROVISIONS WRITE-OFFS DECEMBER 31
- ------------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
1999
Mortgage loans.............................................. $11.5 $(2.4) $ 3.3 $ 5.8
===== ===== ===== =====
1998
Mortgage loans.............................................. $20.7 $(6.8) $ 2.4 $11.5
===== ===== ===== =====
1997
Mortgage loans.............................................. $19.6 $ 2.5 $ 1.4 $20.7
Real estate................................................. 14.9 6.0 20.9 --
----- ----- ----- -----
Total....................................................... $34.5 $ 8.5 $22.3 $20.7
===== ===== ===== =====
</TABLE>

F-20
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Provisions on mortgages during 1999 and 1998 reflect the release of redundant
specific reserves. Write-offs of $20.9 million to the investment valuation
allowance related to real estate in 1997 primarily reflect write downs to the
estimated fair value less costs to sell pursuant to the aforementioned 1997 plan
of disposal.

The carrying value of impaired loans was $18.0 million and $22.0 million, with
related reserves of $0.8 million and $6.0 million as of December 31, 1999 and
1998, respectively. All impaired loans were reserved for as of December 31, 1999
and 1998.

The average carrying value of impaired loans was $21.0 million, $26.1 million
and $30.8 million, with related interest income while such loans were impaired
of $2.1 million, $3.2 million and $3.2 million as of December 31, 1999, 1998 and
1997, respectively.

D. FUTURES CONTRACTS

The Company purchases long futures contracts and sells short futures contracts
on margin to hedge against interest rate fluctuations associated with the sale
of Guaranteed Investment Contracts ("GICs") and other funding agreements. The
Company is exposed to interest rate risk from the time of sale of the GIC until
the receipt of the deposit and purchase of the underlying asset to back the
liability. The Company only trades futures contracts with nationally recognized
brokers, which the Company believes have adequate capital to ensure that there
is minimal danger of default. The Company does not require collateral or other
securities to support financial instruments with credit risk.

The notional amount of futures contracts outstanding was $37.1 million and $92.7
million at December 31, 1999 and 1998, respectively. The notional amounts of the
contracts represent the extent of the Company's investment but not future cash
requirements, as the Company generally settles open positions prior to maturity.
The maturity of all futures contracts outstanding is less than one year. The
fair value of futures contracts outstanding was $36.8 million and $92.5 million
at December 31, 1999 and 1998, respectively.

Gains and losses on hedge contracts related to interest rate fluctuations are
deferred and recognized in income over the period being hedged corresponding to
related guaranteed investment contracts. If instruments being hedged by futures
contracts are disposed, any unamortized gains or losses on such contracts are
included in the determination of the gain or loss from the disposition. Deferred
hedging losses were $0.9 million and $1.8 million in 1999 and 1998,
respectively. Gains and losses on hedge contracts that are deemed ineffective by
the Company are realized immediately. There was $0.1 million of gains realized
on ineffective hedges in 1998. There were no gains or losses in 1999 and 1997.

A reconciliation of the notional amount of futures contracts is as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- --------- --------- ------
<S> <C> <C> <C>
Contracts outstanding, beginning of year.................... $ 92.7 $ -- $(33.0)
New contracts............................................... 947.0 1,117.5 (0.2)
Contracts terminated........................................ (1,002.6) (1,024.8) 33.2
--------- --------- ------
Contracts outstanding, end of year.......................... $ 37.1 $ 92.7 $ --
========= ========= ======
</TABLE>

E. FOREIGN CURRENCY SWAP CONTRACTS

The Company enters into foreign currency swap contracts with swap counterparties
to hedge foreign currency exposure on specific fixed income securities.
Additionally, in 1999, the Company entered into a foreign

F-21
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

currency swap contract to hedge foreign currency exposure on specific fixed rate
funding agreements. Interest and principal related to foreign fixed income
securities and liabilities payable in foreign currencies, at current exchange
rates, are exchanged for the equivalent payment in U.S dollars translated at a
specific currency exchange rate. The primary risk associated with these
transactions is the inability of the counterparty to meet its obligation. The
Company regularly assesses the financial strength of its counterparties and
generally enters into forward or swap agreements with counterparties rated "A"
or better by nationally recognized rating agencies. The Company's maximum
exposure to counterparty credit risk is the difference between the foreign
currency exchange rate, as agreed upon in the swap contract, and the foreign
currency spot rate on the date of the exchange, as indicated by the fair value
of the contract. The fair values of the foreign currency swap contracts
outstanding were $(4.7) million and $1.2 million at December 31, 1999 and 1998,
respectively. Changes in the fair value of contracts hedging fixed income
securities are reported as an unrealized gain or loss, consistent with the
underlying hedged security. Changes in fair value of contracts hedging fixed
rate funding agreements are reported as other operating income, consistent with
the underlying hedged liability. The net decrease in other operating income
related to these contracts was $2.6 million in 1999. The Company does not
require collateral or other security to support financial instruments with
credit risk.

The difference between amounts paid and received on foreign currency swap
contracts is reflected in the net investment income related to the underlying
assets and is not material in 1999, 1998 and 1997. Any gain or loss on the
termination of swap contracts is deferred and recognized with any gain or loss
on the hedged transaction. The Company had no deferred gain or loss on foreign
currency swap contracts in 1999 or 1998.

A reconciliation of the notional amount of foreign currency swap contracts is as
follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- ------ ----- ------
<S> <C> <C> <C>
Contracts outstanding, beginning of year.................... $ 42.6 $42.6 $ 47.6
New contracts............................................... 52.9 -- 5.0
Contracts expired........................................... (24.0) -- (10.0)
------ ----- ------
Contracts outstanding, end of year.......................... $ 71.5 $42.6 $ 42.6
====== ===== ======
</TABLE>

Expected maturities of foreign currency swap contracts outstanding at
December 31, 1999 are $8.3 million in 2000, $52.9 million in 2001 and $10.3
million thereafter. There are no expected maturities of such foreign currency
swap contracts in 2002, 2003 and 2004.

F. INTEREST RATE SWAP CONTRACTS

The Company enters into interest rate swap contracts to hedge exposure to
interest rate fluctuations. Specifically, for floating rate GIC liabilities that
are matched with fixed rate securities, the Company manages the interest rate
risk by hedging with interest rate swap contracts. Under these swap contracts,
the Company agrees to exchange, at specified intervals, the difference between
fixed and floating interest amounts calculated on an agreed-upon notional
principal amount. As with foreign currency swap contracts, the primary risk
associated with these transactions is the inability of the counterparty to meet
its obligation. The Company regularly assesses the financial strength of its
counterparties and generally enters into forward or swap agreements with
counterparties rated "A" or better by nationally recognized rating agencies.
Because the underlying principal of swap contracts is not exchanged, the
Company's maximum exposure to counterparty credit risk is the difference in
payments exchanged, which at December 31, 1999 and 1998 were net payables of
$4.2 million and $3.9 million, respectively. The Company does not require
collateral or other security to support financial instruments with credit risk.

F-22
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The net amount receivable or payable is recognized over the life of the swap
contract as an adjustment to net investment income. The decrease in net
investment income related to interest rate swap contracts was $7.0 million, $2.8
million and $0.4 million for the years ended December 31, 1999, 1998 and 1997,
respectively. The fair value of interest rate swap contracts outstanding was
$33.1 million and $(28.3) million at December 31, 1999 and 1998, respectively.
Changes in the fair value of contracts are reported as an unrealized gain or
loss, consistent with the underlying hedged security. Any gain or loss on the
termination of interest rate swap contracts accounted for as hedges are deferred
and recognized with the gain or loss on the hedged transaction. The Company had
no deferred gain or loss on interest rate swap contracts in 1999 or 1998.

A reconciliation of the notional amount of interest rate swap contracts is as
follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- -------- -------- ------
<S> <C> <C> <C>
Contracts outstanding, beginning of year.................... $1,112.6 $ 244.1 $ 5.0
New contracts............................................... 905.4 873.5 244.7
Contracts terminated........................................ (888.5) -- --
Contracts expired........................................... (80.0) (5.0) (5.6)
Distribution of subsidiaries (Note 3)....................... (23.6) -- --
-------- -------- ------
Contracts outstanding, end of year.......................... $1,025.9 $1,112.6 $244.1
======== ======== ======
</TABLE>

Expected maturities of interest rate swap contracts outstanding at December 31,
1999 are $44.0 million in 2000, $43.1 million in 2001, $83.5 million in 2002,
$536.0 million in 2003, and $319.3 million in 2004. There are no expected
maturities of such interest rate swap contracts thereafter.

G. OTHER SWAP CONTRACTS

The Company enters into insurance portfolio-linked and credit default swap
contracts for investment purposes. Under the insurance portfolio-linked swap
contracts, the Company agrees to exchange cash flows according to the
performance of a specified underwriter's portfolio of insurance business. As
with interest rate swap contracts, the primary risk associated with insurance
portfolio-linked swap contracts is the inability of the counterparty to meet its
obligation. Under the terms of the credit default swap contracts, the Company
assumes the default risk of a specific high credit quality issuer in exchange
for a stated annual premium. In the case of default, the Company will pay the
counterparty par value for a pre-determined security of the issuer. The primary
risk associated with these transactions is the default risk of the underlying
companies. The Company regularly assesses the financial strength of its
counterparties and the underlying companies in default swap contracts, and
generally enters into forward or swap agreements with counterparties rated "A"
or better by nationally recognized rating agencies. Because the underlying
principal of swap contracts is not exchanged, the Company's maximum exposure to
counterparty credit risk is the difference in payments exchanged, which at
December 31, 1999, was not material to the Company. The Company does not require
collateral or other security to support financial instruments with credit risk.

The swap contracts are marked to market with any gain or loss recognized
currently. The fair values of swap contracts outstanding were $(0.3) million and
$(0.1) million at December 31, 1999 and 1998, respectively. The net amount
receivable or payable under insurance portfolio-linked swap contracts is
recognized when the contracts are marked to market. The net (decrease) increase
in realized investment gains related to these contracts was $(0.2) million, $1.0
million and $(1.4) million for the years ended December 31, 1999, 1998 and 1997,
respectively.

F-23
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The stated annual premium under credit default swap contracts is recognized
currently in net investment income. The net increase to investment income
related to credit default swap contracts was $0.4 million and $0.2 million for
the years ended December 31, 1999 and 1998, respectively. There was no net
investment income recognized in 1997.

A reconciliation of the notional amount of other swap contracts is as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- ------- ------ -------
<S> <C> <C> <C>
Contracts outstanding, beginning of year.................... $ 255.0 $ 15.0 $ 58.6
New contracts............................................... 50.0 266.3 192.1
Contracts expired........................................... (115.0) (26.3) (211.6)
Contracts terminated........................................ -- -- (24.1)
------- ------ -------
Contracts outstanding, end of year.......................... $ 190.0 $255.0 $ 15.0
======= ====== =======
</TABLE>

Expected maturities of other swap contracts outstanding at December 31, 1999 are
as follows: $140.0 million in 2000 and $50.0 million in 2001. There are no
expected maturities of such other swap contracts in 2002, 2003, 2004 and
thereafter.

H. OTHER

At December 31, 1999 and 1998, FAFLIC had no concentration of investments in a
single investee exceeding 10% of shareholder's equity.

7. INVESTMENT INCOME AND GAINS AND LOSSES

A. NET INVESTMENT INCOME

The components of net investment income were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- ------ ------ ------
<S> <C> <C> <C>
Fixed maturities............................................ $415.7 $509.6 $523.3
Mortgage loans.............................................. 45.5 57.6 57.1
Equity securities........................................... 1.7 7.2 10.5
Policy loans................................................ 12.7 11.9 10.9
Real estate and other long-term investments................. 14.4 7.0 31.5
Short-term investments...................................... 26.6 15.6 9.9
------ ------ ------
Gross investment income..................................... 516.6 608.9 643.2
Less investment expenses.................................... (13.5) (15.0) (23.7)
------ ------ ------
Net investment income....................................... $503.1 $593.9 $619.5
====== ====== ======
</TABLE>

At December 31, 1999, the company had fixed maturities with a carrying value of
$1.0 million on non-accrual status. There were no mortgage loans on non-accrual
status at December 31, 1999. At December 31, 1998, there was one mortgage loan
on non-accrual status which had an outstanding principal balance of $4.3
million. This loan was restructured and fully impaired. There were no fixed
maturities on non-accrual status at December 31, 1998. The effect of
non-accruals, compared with amounts that would have been recognized in

F-24
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

accordance with the original terms of the investments, was a reduction in net
income by $1.4 million in 1999, and had no impact in 1998 and 1997.

The payment terms of mortgage loans may from time to time be restructured or
modified. The investment in restructured mortgage loans, based on amortized
cost, amounted to $18.8 million, $28.7 million and $40.3 million at
December 31, 1999, 1998 and 1997, respectively. Interest income on restructured
mortgage loans that would have been recorded in accordance with the original
terms of such loans amounted to $2.5 million, $3.3 million and $3.9 million in
1999, 1998 and 1997, respectively. Actual interest income on these loans
included in net investment income aggregated $1.8 million, $3.3 million and $4.2
million in 1999, 1998 and 1997, respectively.

There were no mortgage loans which were non-income producing for the year ended
December 31, 1999. There were, however, fixed maturities with a carrying value
of $0.3 million which were non-income producing for the year ended December 31,
1999.

Included in other long-term investments is income from limited partnerships of
$6.6 million in 1999, losses of $6.3 million in 1998, and income of $7.6 million
in 1997.

B. NET REALIZED INVESTMENT GAINS AND LOSSES

Realized gains (losses) on investments were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- ------ ------ -----
<S> <C> <C> <C>
Fixed maturities............................................ $(52.0) $(11.6) $14.2
Mortgage loans.............................................. 2.5 8.8 (1.2)
Equity securities........................................... 141.3 63.7 53.5
Real estate and other....................................... 8.5 -- 9.8
------ ------ -----
Net realized investment gains............................... $100.3 $ 60.9 $76.3
====== ====== =====
</TABLE>

The proceeds from voluntary sales of available-for-sale securities and the gross
realized gains and gross realized losses on those sales were as follows:

<TABLE>
<CAPTION>
PROCEEDS FROM
FOR THE YEARS ENDED DECEMBER 31, VOLUNTARY GROSS GROSS
(IN MILLIONS) SALES GAINS LOSSES
- ------------- ------------- ------ ------
<S> <C> <C> <C>
1999
Fixed maturities............................................ $1,480.5 $ 9.2 $ 27.1
Equity securities........................................... 421.2 149.0 7.6

1998
Fixed maturities............................................ $ 979.2 $ 17.9 $ 11.3
Equity securities........................................... 258.7 72.8 9.0

1997
Fixed maturities............................................ $1,870.7 $ 27.0 $ 15.9
Equity securities........................................... 144.9 55.5 1.2
</TABLE>

F-25
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

C. OTHER COMPREHENSIVE (LOSS) INCOME RECONCILIATION

The following table provides a reconciliation of gross unrealized (losses) gains
to the net balance shown in the Consolidated Statements of Comprehensive (Loss)
Income:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- -------- -------- ------
<S> <C> <C> <C>
Unrealized (losses) gains on securities:
Unrealized holding (losses) gains arising during period,
(includes $22.7 resulting from the distribution of
subsidiaries in 1999, net of taxes (benefit) and minority
interest of $(103.3) million, $(20.8) million and $123.7
million in 1999, 1998 and 1997, respectively).............. $ (121.9) $ (6.8) $115.5
Less: reclassification adjustment for (losses) gains
included in net income (net of taxes and minority interest
of $33.5 million, $21.5 million and $30.7 million in 1999,
1998 and 1997, respectively)............................... (62.2) 33.3 37.6
-------- -------- ------
Other comprehensive (loss) income........................... $ (184.1) $ (40.1) $ 77.9
======== ======== ======
</TABLE>

8. FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS

Statement No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value information about certain financial
instruments (insurance contracts, real estate, goodwill and taxes are excluded)
for which it is practicable to estimate such values, whether or not these
instruments are included in the balance sheet. The fair values presented for
certain financial instruments are estimates which, in many cases may differ
significantly from the amounts which could be realized upon immediate
liquidation. In cases where market prices are not available, estimates of fair
value are based on discounted cash flow analyses which utilize current interest
rates for similar financial instruments which have comparable terms and credit
quality. Included in the fair value of fixed maturities are swap contracts used
to hedge fixed maturities with a fair value of $31.1 million and $(27.1) million
at December 31, 1999 and 1998, respectively. In addition, the Company held
futures contracts with a carrying value of $(0.9) million and $(1.8) million at
December 31, 1999 and 1998, respectively. The fair value of these contracts was
$36.8 million and $92.5 million at December 31, 1999 and 1998, respectively.

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments:

CASH AND CASH EQUIVALENTS

For these short-term investments, the carrying amount approximates fair value.

FIXED MATURITIES

Fair values are based on quoted market prices, if available. If a quoted market
price is not available, fair values are estimated using independent pricing
sources or internally developed pricing models using discounted cash flow
analyses.

F-26
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EQUITY SECURITIES

MORTGAGE LOANS

Fair values are estimated by discounting the future contractual cash flows using
the current rates at which similar loans would be made to borrowers with similar
credit ratings. The fair value of below investment grade mortgage loans is
limited to the lesser of the present value of the cash flows or book value.

POLICY LOANS

The carrying amount reported in the consolidated balance sheets approximates
fair value since policy loans have no defined maturity dates and are inseparable
from the insurance contracts.

INVESTMENT CONTRACTS (WITHOUT MORTALITY FEATURES)

Fair values for the Company's liabilities under guaranteed investment type
contracts are estimated using discounted cash flow calculations using current
interest rates for similar contracts with maturities consistent with those
remaining for the contracts being valued. Liabilities under individual fixed
annuity contracts are estimated based on current surrender values, supplemental
contracts without life contingencies reflect current fund balances, and other
individual contract funds represent the present value of future policy benefits.
All other liabilities are based on surrender values.

TRUST INSTRUMENTS SUPPORTED BY FUNDING OBLIGATIONS

Fair values are estimated using discounted cash flow calculations using current
interest rates for similar contracts with maturities consistent with those
remaining for the contracts being valued.

DEBT

The carrying value of short-term debt reported in the balance sheet approximates
fair value.

F-27
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The estimated fair values of the financial instruments were as follows:

<TABLE>
<CAPTION>
1999 1998
------------------ ------------------
DECEMBER 31, CARRYING FAIR CARRYING FAIR
(IN MILLIONS) VALUE VALUE VALUE VALUE
- ------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Cash and cash equivalents................................. $ 279.3 $ 279.3 $ 504.0 $ 504.0
Fixed maturities.......................................... 3,660.7 3,660.7 7,683.9 7,683.9
Equity securities......................................... 51.4 51.4 397.1 397.1
Mortgage loans............................................ 521.2 521.9 562.3 587.1
Policy loans.............................................. 170.5 170.5 154.3 154.3
-------- -------- -------- --------
$4,683.1 $4,683.8 $9,301.6 $9,326.4
======== ======== ======== ========
FINANCIAL LIABILITIES
Guaranteed investment contracts........................... $1,316.0 $1,341.4 $1,791.8 $1,830.8
Supplemental contracts without life contingencies......... 48.8 48.8 37.3 37.3
Dividend accumulations.................................... 88.1 88.1 88.4 88.4
Other individual contract deposit funds................... 48.4 48.2 61.6 61.1
Other group contract deposit funds........................ 602.9 583.5 700.4 704.0
Individual fixed annuity contracts........................ 1,092.5 1,057.1 1,110.6 1,073.6
Trust instruments supported by funding obligations........ 50.6 49.6 -- --
Short-term debt........................................... -- -- 221.3 221.3
-------- -------- -------- --------
$3,247.3 $3,216.7 $4,011.4 $4,016.5
======== ======== ======== ========
</TABLE>

F-28
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. CLOSED BLOCK

Included in other income in the Consolidated Statements of Income in 1999, 1998
and 1997 is a net pre-tax contribution from the Closed Block of $13.8 million,
$10.4 million and $9.1 million, respectively. Summarized financial information
of the Closed Block as of December 31, 1999 and 1998 and for the periods ended
December 31, 1999, 1998 and 1997 is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS) 1999 1998
- ------------- ------ ------
<S> <C> <C>
Assets
Fixed maturities, at fair value (amortized cost of $387.4
and $399.1
respectively)........................................... $372.9 $414.2
Mortgage loans............................................ 136.3 136.0
Policy loans.............................................. 201.1 210.9
Cash and cash equivalents................................. 22.6 9.4
Accrued investment income................................. 14.0 14.1
Deferred policy acquisition costs......................... 13.1 15.6
Other assets.............................................. 12.3 2.9
------ ------
Total assets................................................ $772.3 $803.1
====== ======
Liabilities
Policy liabilities and accruals........................... $835.2 $862.9
Other liabilities......................................... 6.9 9.1
------ ------
Total liabilities........................................... $842.1 $872.0
====== ======
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- ------ ------ ------
<S> <C> <C> <C>
Revenues
Premiums and other income................................. $ 52.1 $ 55.4 $ 58.3
Net investment income..................................... 53.8 53.3 53.4
Realized investment (loss) gain........................... (0.6) 0.1 1.3
------ ------ ------
Total revenues.............................................. 105.3 108.8 113.0
------ ------ ------
Benefits and expenses
Policy benefits........................................... 88.9 95.0 100.5
Policy acquisition expenses............................... 2.5 2.7 3.0
Other operating expenses.................................. 0.1 0.7 0.4
------ ------ ------
Total benefits and expenses................................. 91.5 98.4 103.9
------ ------ ------
Contribution from the Closed Block.......................... $ 13.8 $ 10.4 $ 9.1
====== ====== ======
</TABLE>

F-29
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- ------- ------- -------
<S> <C> <C> <C>
Cash flows
Cash flows from operating activities:
Contribution from the Closed Block........................ $ 13.8 $ 10.4 $ 9.1
Change in:
Deferred policy acquisition costs, net.................. 2.5 2.6 2.9
Premiums and other receivables.......................... -- 0.3 --
Policy liabilities and accruals......................... (13.1) (13.5) (11.6)
Accrued investment income............................... 0.1 - 0.2
Deferred taxes.......................................... -- 0.1 (5.1)
Other assets............................................ (8.3) 2.4 (2.9)
Expenses and taxes payable.............................. (2.9) (2.9) (2.0)
Other, net.............................................. 0.8 (0.1) (1.2)
------- ------- -------
Net cash used in operating activities..................... (7.1) (0.7) (10.6)
Cash flows from investing activities:
Sales, maturities and repayments of investments......... 139.0 83.6 161.6
Purchases of investments................................ (128.5) (106.5) (161.4)
Other, net.............................................. 9.8 7.9 11.4
------- ------- -------
Net cash provided by (used in) investing activities....... 20.3 (15.0) 11.6
------- ------- -------
Net increase (decrease) in cash and cash equivalents........ 13.2 (15.7) 1.0
Cash and cash equivalents, beginning of year................ 9.4 25.1 24.1
------- ------- -------
Cash and cash equivalents, end of year...................... $ 22.6 $ 9.4 $ 25.1
======= ======= =======
</TABLE>

There were no valuation allowances on mortgage loans in the Closed Block at
December 31, 1999, 1998 or 1997, respectively.

Many expenses related to Closed Block operations are charged to operations
outside the Closed Block; accordingly, the contribution from the Closed Block
does not represent the actual profitability of the Closed Block operations.
Operating costs and expenses outside of the Closed Block are, therefore,
disproportionate to the business outside the Closed Block.

10. DEBT

Short-term debt consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS) 1999 1998
- ------------- ------ ------
<S> <C> <C>
Short-term
Commercial paper.......................................... $ -- $ 41.3
Borrowings under bank credit facility..................... -- 150.0
Repurchase agreements..................................... -- 30.0
------ ------
Total short-term debt....................................... $ -- $221.3
====== ======
</TABLE>

F-30
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FAFLIC issues commercial paper primarily to manage imbalances between operating
cash flows and existing commitments. Commercial paper borrowing arrangements are
supported by a credit agreement. At December 31, 1999, there was no commercial
paper outstanding.

Effective December 4, 1998, the Company entered into a credit agreement that
expired on February 5, 1999. Borrowings under this agreement were unsecured and
incurred interest at a rate per annum equal to the eurodollar rate plus
applicable margin. Borrowings outstanding under this credit facility at
December 31, 1998 were $150.0 million. These borrowings were repaid in February
1999.

The company utilizes repurchase agreements to finance certain transactions and
had approximately $30 million in such agreements outstanding at December
31,1998. There were no repurchase agreements outstanding at December 31, 1999.

In 1999, there was no interest expense related to borrowings under the credit
agreement. Interest expense related to borrowings under the credit agreement was
approximately $0.7 million and $2.8 million in 1998 and 1997, respectively. All
interest expense is recorded in other operating expenses.

In October, 1995, AFC issued Senior Debentures with a face value of $200.0
million, pay interest at a rate of 7 5/8%, and mature on October 16, 2025. The
primary source of cash for repayment of the debt by AFC is dividends from FAFLIC
and Allmerica P&C.

11. FEDERAL INCOME TAXES

Provisions for federal income taxes have been calculated in accordance with the
provisions of SFAS No. 109. A summary of the federal income tax expense
(benefit) on continuing operations in the consolidated statements of income is
shown below:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- ------ ------ ------
<S> <C> <C> <C>
Federal income tax expense (benefit)
Current................................................... $88.7 $ 74.6 $74.4
Deferred.................................................. 4.3 (15.4) 14.2
----- ------ -----
Total....................................................... $93.0 $ 59.2 $88.6
===== ====== =====
</TABLE>

The federal income taxes attributable to the consolidated results of continuing
operations are different from the amounts determined by multiplying income
before federal income taxes by the statutory federal income tax rate. The
sources of the difference and the tax effects of each were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- -------- ------ ------
<S> <C> <C> <C>
Expected federal income tax expense on continuing
operations................................................ $133.9 $107.9 $122.9
Tax-exempt interest....................................... (24.2) (38.9) (37.9)
Dividend received deduction............................... -- (5.1) (3.2)
Changes in tax reserve estimates.......................... (8.7) 2.3 7.8
Tax credits............................................... (8.5) (8.5) (2.7)
Other, net................................................ 0.5 1.5 1.7
------ ------ ------
Federal income tax expense on continuing operations......... $ 93.0 $ 59.2 $ 88.6
====== ====== ======
</TABLE>

F-31
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The deferred income tax (asset) liability represents the tax effects of
temporary differences attributable to the Company's consolidated federal tax
return group. Its components were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS) 1999 1998
- ------------- -------- --------
<S> <C> <C>
Deferred tax (assets) liabilities
AMT carryforwards......................................... $ -- $ (16.8)
Loss reserve discounting.................................. (283.5) (406.6)
Deferred acquisition costs................................ 355.7 345.8
Employee benefit plans.................................... (52.0) (45.3)
Investments, net.......................................... (19.5) 121.7
Bad debt reserve.......................................... -- (1.8)
Litigation reserve........................................ (6.0) (10.9)
Discontinued operations................................... (11.7) --
Other, net................................................ (1.1) (5.5)
------- -------
Deferred tax asset, net..................................... $ (18.1) $ (19.4)
======= =======
</TABLE>

Gross deferred income tax assets totaled $515.8 million and $486.9 millions at
December 31, 1999 and 1998, respectively. Gross deferred income tax liabilities
totaled $497.7 million and $467.5 million at December 31, 1999 and 1998,
respectively.

The Company believes, based on the its recent earnings history and its future
expectations, that the Company's taxable income in future years will be
sufficient to realize all deferred tax assets. In determining the adequacy of
future income, the Company considered the future reversal of its existing
temporary differences and available tax planning strategies that could be
implemented, if necessary. At December 31, 1999 there are no available
alternative minimum tax credit carryforwards.

The Company's federal income tax returns are routinely audited by the Internal
Revenue Services ("IRS"), and provisions are routinely made in the financial
statements in anticipation of the results of these audits. The IRS has examined
the FAFLIC/AFLIAC consolidated group's federal income tax returns through 1994.
The IRS has also examined the former Allmerica P&C consolidated group's federal
income tax returns through 1994. The Company has appealed certain adjustments
proposed by the IRS with respect to the federal income tax returns for 1992,
1993 and 1994 for the FAFLIC/AFLIAC consolidated group. Also, certain
adjustments proposed by the IRS with respect to FAFLIC/AFLIAC's federal income
tax returns for 1982 and 1983 remain unresolved. If upheld, these adjustments
would result in additional payments; however, the Company will vigorously defend
its position with respect to these adjustments. In the Company's opinion,
adequate tax liabilities have been established for all years. However, the
amount of these tax liabilities could be revised in the near term if estimates
of the Company's ultimate liability are revised.

12. PENSION PLANS

FAFLIC, as the common employer for all AFC Companies ("affiliated Companies"),
provides multiple benefit plans to employees and agents of these affiliated
Companies, including retirement plans. The salaries of employees and agents
covered by these plans and the expenses of these plans are charged to the
affiliated Companies in accordance with an intercompany cost sharing agreement.

F-32
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FAFLIC provides retirement benefits to substantially all of its employees under
a defined benefit pension plan. This plan is based on a defined benefit cash
balance formula, whereby the Company annually provides an allocation to each
eligible employee based on a percentage of that employee's salary, similar to a
defined contribution plan arrangement. The 1999, 1998 and 1997 allocations were
based on 7.0% of each eligible employee's salary. In addition to the cash
balance allocation, certain transition group employees, who have met specified
age and service requirements as of December 31, 1994, are eligible for a
grandfathered benefit based primarily on the employees' years of service and
compensation during their highest five consecutive plan years of employment. The
Company's policy for the plans is to fund at least the minimum amount required
by the Employee Retirement Income Security Act of 1974.

Components of net periodic pension cost were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- -------- -------- --------
<S> <C> <C> <C>
Service cost -- benefits earned during the year............. $ 19.3 $ 19.0 $ 19.9
Interest cost............................................... 26.5 25.5 23.5
Expected return on plan assets.............................. (38.9) (34.9) (31.2)
Recognized net actuarial loss............................... 0.4 0.4 0.1
Amortization of transition asset............................ (1.4) (1.8) (1.9)
Amortization of prior service cost.......................... (2.2) (1.7) (2.0)
------- ------- -------
Net periodic pension cost................................. $ 3.7 $ 6.5 $ 8.4
======= ======= =======
</TABLE>

In 1999, subsequent to the AFC corporate reorganization, approximately $1.7
million of the net periodic pension cost was allocated to the distributed
subsidiaries.

The following table summarizes the status of the plan. At December 31, 1999 and
1998 the plans' assets exceeded their projected benefit obligations.

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS) 1999 1998
- ------------- -------- --------
<S> <C> <C>
Change in benefit obligations:
Projected benefit obligation at beginning of year......... $ 414.2 $ 370.4
Service cost -- benefits earned during the year........... 19.3 19.0
Interest cost............................................. 26.5 25.5
Actuarial (gains) losses.................................. (44.4) 20.4
Benefits paid............................................. (22.9) (21.1)
------- -------
Projected benefit obligation at end of year............. 392.7 414.2
------- -------
</TABLE>

F-33
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS) 1999 1998
- ------------- -------- --------
<S> <C> <C>
Change in plan assets:
Fair value of plan assets at beginning of year............ 441.6 395.5
Actual return on plan assets.............................. 51.9 67.2
Benefits paid............................................. (22.9) (21.1)
Fair value of plan assets at end of year................ 470.6 441.6
Funded status of the plan................................. 77.9 27.4
Unrecognized transition obligation........................ (21.6) (23.9)
Unamortized prior service cost............................ (12.0) (11.0)
Unrecognized net actuarial gains.......................... (101.6) (54.9)
------- -------
Net pension liability................................... $ (57.3) $ (62.4)
======= =======
</TABLE>

As a result of AFC's merger with Allmerica P&C in 1997, certain pension
liabilities were reduced to reflect their fair value as of the merger date.
These pension liabilities were reduced by $8.9 million and $10.3 million in 1999
and 1998, respectively, which reflects fair value, net of applicable
amortization.

Determination of the projected benefit obligations was based on a weighted
average discount rate of 7.75% and 6.5% in 1999 and 1998, respectively, and the
assumed long-term rate of return on plan assets was 9.0% in both 1999 and 1998.
The actuarial present value of the projected benefit obligations was determined
using assumed rates of increase in future compensation levels ranging from 5.0%
to 5.5%. Plan assets are invested primarily in various separate accounts and the
general account of FAFLIC. Plan assets also include 796,462 shares and 973,262
shares of AFC Common Stock at December 31, 1999 and 1998, respectively, with a
market value of $44.3 million and $56.3 million at December 31, 1999 and 1998,
respectively.

The Company has a defined contribution 401(k) plan for its employees, whereby
the Company matches employee elective 401(k) contributions, up to a maximum
percentage determined annually by the Board of Directors. During 1999, 1998 and
1997, the Company matched 50% of employees' contributions up to 6.0% of eligible
compensation. The total expense related to this plan was $5.9 million, $5.6
million and $3.3 million in 1999, 1998 and 1997, respectively. In 1999,
subsequent to the AFC corporate reorganization, approximately $1.4 million of
the 401(k) expense was allocated to the distributed subsidiaries. In addition to
this plan, the Company has a defined contribution plan for substantially all of
its agents. The plan expense in 1999, 1998 and 1997 was $3.1 million, $3.0
million and $2.8 million, respectively.

On January 1, 1998, substantially all of the defined benefit and defined
contribution 401(k) plans previously provided by the affiliated Companies were
merged with the existing benefit plans of FAFLIC. The merger of benefit plans
resulted in a $5.9 million change of interest adjustment to additional paid-in
capital during 1998. The change of interest adjustment arose from FAFLIC's
forgiveness of certain Allmerica P&C benefit plan liabilities attributable to
Allmerica P&C's minority interest.

13. OTHER POSTRETIREMENT BENEFIT PLANS

FAFLIC, as the common employer for all AFC Companies ("affiliated Companies"),
provides multiple postretirement medical and death benefit plans to employees,
agents and retirees of these affiliated Companies. The costs of these plans are
charged to the affiliated Companies in accordance with an intercompany cost
sharing agreement.

F-34
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Generally, employees become eligible at age 55 with at least 15 years of
service. Spousal coverage is generally provided for up to two years after death
of the retiree. Benefits include hospital, major medical, and a payment at death
equal to retirees' final compensation up to certain limits. Effective
January 1, 1996, the Company revised these benefits so as to establish limits on
future benefit payments and to restrict eligibility to current employees. The
medical plans have varying copayments and deductibles, depending on the plan.
These plans are unfunded.

The plans' funded status reconciled with amounts recognized in the Company's
Consolidated Balance Sheets were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS) 1999 1998
- ------------- -------- --------
<S> <C> <C>
Change in benefit obligation:
Accumulated postretirement benefit obligation at beginning
of year................................................... $ 84.0 $ 71.8
Service cost................................................ 2.9 3.1
Interest cost............................................... 4.6 5.1
Actuarial (gains) losses.................................... (21.2) 7.6
Benefits paid............................................... (3.5) (3.6)
------- -------
Accumulated postretirement benefit obligation at end of
year.................................................... 66.8 84.0
------- -------
Fair value of plan assets at end of year.................... -- --
------- -------
Funded status of the plan................................... (66.8) (84.0)
Unamortized prior service cost.............................. (9.8) (12.9)
Unrecognized net actuarial (gains) losses................... (13.8) 7.5
------- -------
Accumulated postretirement benefit costs.................. $ (90.4) $ (89.4)
======= =======
</TABLE>

The components of net periodic postretirement benefit expense were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- -------- -------- --------
<S> <C> <C> <C>
Service cost................................................ $ 2.9 $ 3.1 $ 3.0
Interest cost............................................... 4.6 5.1 4.6
Recognized net actuarial loss (gain)........................ 0.1 0.1 (0.1)
Amortization of prior service cost.......................... (2.3) (2.4) (2.7)
------ ------ ------
Net periodic postretirement benefit cost.................... $ 5.3 $ 5.9 $ 4.8
====== ====== ======
</TABLE>

In 1999, subsequent to the AFC corporate reorganization, approximately $1.1
million of the net periodic postretirement cost was allocated to the distributed
subsidiaries.

As a result of AFC's merger with Allmerica P&C in 1997, certain postretirement
liabilities were reduced to reflect their fair value as of the merger date.
These postretirement liabilities were reduced by $4.6 million and $5.4 million
in 1999 and 1998, respectively, which reflects fair value, net of applicable
amortization.

For purposes of measuring the accumulated postretirement benefit obligation at
December 31, 1999, health care costs were assumed to increase 6.0% in 2000,
declining thereafter until the ultimate rate of 5.5% is reached in 2001 and
remains at that level thereafter. The health care cost trend rate assumption has
a significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rates by

F-35
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

one percentage point in each year would increase the accumulated postretirement
benefit obligation at December 31, 1999 by $4.1 million, and the aggregate of
the service and interest cost components of net periodic postretirement benefit
expense for 1999 by $0.6 million. Conversely, decreasing the assumed health care
cost trend rates by one percentage point in each year would decrease the
accumulated postretirement benefit obligation at December 31, 1999 by $3.6
million, and the aggregate of the service and interest cost components of net
periodic postretirement benefit expense for 1999 by $0.5 million.

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.75% and 6.5% at December 31, 1999 and
1998, respectively. In addition, the actuarial present value of the accumulated
postretirement benefit obligation was determined using an assumed rate of
increase in future compensation levels of 5.5% for FAFLIC agents.

On January 1, 1998, substantially all of the postretirement medical and death
benefits plans previously provided by the affiliated Companies were merged with
the existing benefit plans of FAFLIC. The merger of benefit plans resulted in a
$3.8 million change of interest adjustment to additional paid-in capital during
1998. The change of interest adjustment arose from FAFLIC's forgiveness of
certain Allmerica P&C benefit plan liabilities attributable to Allmerica P&C's
minority interest.

14. DIVIDEND RESTRICTIONS

Massachusetts and Delaware have enacted laws governing the payment of dividends
to stockholders by insurers. These laws affect the dividend paying ability of
FAFLIC and AFLIAC, respectively.

Massachusetts' statute limits the dividends an insurer may pay in any twelve
month period, without the prior permission of the Commonwealth of Massachusetts
Insurance Commissioner, to the greater of (i) 10% of its statutory policyholder
surplus as of the preceding December 31 or (ii) the individual company's
statutory net gain from operations for the preceding calendar year (if such
insurer is a life company), or its net income for the preceding calendar year
(if such insurer is not a life company). In addition, under Massachusetts law,
no domestic insurer shall pay a dividend or make any distribution to its
shareholders from other than unassigned funds unless the Commissioner shall have
approved such dividend or distribution. During 1999 and 1997, no dividends were
declared by FAFLIC to AFC. During 1998, FAFLIC paid dividends of $50.0 million
to AFC. As of July 1, 1999, FAFLIC's ownership of Allmerica P&C, as well as
several non-insurance subsidiaries, was transferred from FAFLIC to AFC. Under an
agreement with the Commissioner, any dividend from FAFLIC to AFC for years 2000
and 2001 would require the prior approval of the Commissioner and may require
AFC to make additional capital contributions to FAFLIC.

Pursuant to Delaware's statute, the maximum amount of dividends and other
distributions that an insurer may pay in any twelve month period, without the
prior approval of the Delaware Commissioner of Insurance, is limited to the
greater of (i) 10% of its policyholders' surplus as of the preceding
December 31 or (ii) the individual company's statutory net gain from operations
for the preceding calendar year (if such insurer is a life company) or its net
income (not including realized capital gains) for the preceding calendar year
(if such insurer is not a life company). Any dividends to be paid by an insurer,
whether or not in excess of the aforementioned threshold, from a source other
than statutory earned surplus would also require the prior approval of the
Delaware Commissioner of Insurance. No dividends were declared by AFLIAC to
FAFLIC during 1999, 1998 or 1997. During 2000, AFLIAC could pay dividends of
$34.3 million to FAFLIC without prior approval.

F-36
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15. SEGMENT INFORMATION

The Company offers Asset Accumulation financial products and services. Prior to
the AFC corporate reorganization, the Company offered financial products and
services in two major areas: Risk Management and Asset Accumulation. Within
these broad areas, the Company conducted business principally in three operating
segments. These segments were Risk Management, Allmerica Financial Services and
Allmerica Asset Management. In accordance with Statement No. 131, the separate
financial information of each segment is presented consistent with the way
results are regularly evaluated by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. A summary of
the Company's reportable segments is included below.

In 1999, the Company reorganized its Property and Casualty business and
Corporate Risk Management Services operations within the Risk Management
segment. Under the new structure, the Risk Management segment manages its
business through five distribution channels identified as Hanover North, Hanover
South, Citizens Midwest, Allmerica Voluntary Benefits and Allmerica Specialty.
During the second quarter of 1999, the Company approved a plan to exit its group
life and health business, consisting of its EBS business, its AGU business and
its reinsurance pool business. Results of operations from this business,
relating to both the current and the prior periods, have been segregated and
reported as a component of discontinued operations in the Consolidated
Statements of Income. Operating results from this business were previously
reported in the Allmerica Voluntary Benefits and Allmerica Specialty
distribution channels. Prior to 1999, results of the group life and health
business were included in the Corporate Risk Management Services segment, while
all other Risk Management business was reflected in the Property and Casualty
segment.

The Risk Management segment's property and casualty business is offered
primarily through the Hanover North, Hanover South and Citizens Midwest
distribution channels utilizing the Company's independent agent network
primarily in the Northeast, Midwest and Southeast United States, maintaining a
strong regional focus. Allmerica Voluntary Benefits focuses on worksite
distribution, which offers discounted property and casualty products through
employer sponsored programs, and affinity group property and casualty business.
Allmerica Specialty offers special niche property and casualty products in
selected markets. On July 1, 1999, AFC made certain changes to its corporate
structure as discussed in Note 3. As a result, FAFLIC distributed its interest
in the property and casualty business after that date.

The Asset Accumulation group includes two segments: Allmerica Financial Services
and Allmerica Asset Management. The Allmerica Financial Services segment
includes variable annuities, variable universal life and traditional life
insurance products distributed via retail channels as well as group retirement
products, such as defined benefit and 401(k) plans and tax-sheltered annuities
distributed to institutions. Through its Allmerica Asset Management segment, the
Company offers its customers the option of investing in GICs such as the
traditional GIC, synthetic GIC and other funding agreements. Funding agreements
are investment contracts issued to institutional buyers, such as money market
funds, corporate cash management programs and securities lending collateral
programs, which typically have short maturities and periodic interest rate
resets based on an index such as LIBOR. This segment is also a Registered
Investment Advisor providing investment advisory services, primarily to
affiliates, and to other institutions, such as insurance companies and pension
plans. As a result of the aforementioned change in the AFC corporate structure,
FAFLIC distributed its ownership of certain investment advisory business as of
July 1, 1999.

In addition to the three operating segments, the Company has a Corporate
segment, which consists primarily of cash, investments, corporate debt, Capital
Securities and corporate overhead expenses. Corporate overhead

F-37
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

expenses reflect costs not attributable to a particular segment, such as those
generated by certain officers and directors, Corporate Technology, Corporate
Finance, Human Resources and the Legal department.

Management evaluates the results of the aforementioned segments based on a
pre-tax and minority interest basis. Segment income is determined by adjusting
net income for net realized investment gains and losses, net gains and losses on
disposals of businesses, discontinued operations, extraordinary items, the
cumulative effect of accounting changes and certain other items which management
believes are not indicative of overall operating trends. While these items may
be significant components in understanding and assessing the Company's financial
performance, management believes that the presentation of segment income
enhances understanding of the Company's results of operations by highlighting
net income attributable to the normal, recurring operations of the business.
However, segment income should not be construed as a substitute for net income
determined in accordance with generally accepted accounting principles.

Summarized below is financial information with respect to business segments:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- -------- -------- --------
<S> <C> <C> <C>
Segment revenues:
Risk Management........................................... $1,075.2 $2,220.8 $2,227.3
Asset Accumulation
Allmerica Financial Services............................ 797.0 721.2 713.9
Allmerica Asset Management.............................. 144.5 121.7 91.1
-------- -------- --------
Subtotal............................................ 941.5 842.9 805.0
-------- -------- --------
Corporate................................................. 0.4 2.3 4.7
Intersegment revenues..................................... (0.8) (7.6) (11.5)
-------- -------- --------
Total segment revenues including Closed Block........... 2,016.3 3,058.4 3,025.5
-------- -------- --------
Adjustment to segment revenues:
Adjustment for Closed Block........................... (92.1) (98.4) (102.6)
Change in mortality................................... -- -- (4.2)
Net realized gains.................................... 100.3 60.9 76.3
-------- -------- --------
Total revenues............................................ $2,024.5 $3,020.9 $2,995.0
======== ======== ========
</TABLE>

F-38
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
(IN MILLIONS) 1999 1998 1997
- ------------- -------- -------- --------
Segment income (loss) before income taxes and minority interest:
<S> <C> <C> <C>
Risk Management............................................. $ 85.1 $ 149.7 $ 174.2
Asset Accumulation
Allmerica Financial Services.............................. 207.1 169.0 134.6
Allmerica Asset Management................................ 21.3 23.7 18.4
-------- -------- --------
Subtotal.............................................. 228.4 192.7 153.0
-------- -------- --------
Corporate................................................... (38.6) (45.2) (44.6)
Segment income before income taxes and minority interest... 274.9 297.2 282.6
Adjustments to segment income:
Net realized investment gains, net of amortization........ 106.1 52.2 78.5
Sales practice litigation expense......................... -- (31.0) --
Gain from change in mortality assumptions................. -- -- 47.0
Loss on cession of disability income business............. -- -- (53.9)
Restructuring costs....................................... -- (9.0) --
Other items............................................... -- (0.8) (2.8)
-------- -------- --------
Income before taxes and minority interest................... $ 381.0 $ 308.6 $ 351.4
======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
(IN MILLIONS) 1999 1998 1999 1998
- ------------- --------- --------- ------------ ------------
IDENTIFIABLE ASSETS DEFERRED ACQUISITION COSTS
<S> <C> <C> <C> <C>
Risk Management............................... $ 542.0 $ 6,216.8 $ 6.0 $ 167.5
Asset Accumulation
Allmerica Financial Services................ 23,410.7 19,407.3 1,213.1 993.1
Allmerica Asset Management.................. 1,381.1 1,810.9 0.4 0.6
--------- --------- --------- ---------
Subtotal................................ 24,791.8 21,218.2 1,213.5 993.7
Corporate................................... -- 29.6 -- --
--------- --------- --------- ---------
Total..................................... $25,333.8 $27,464.6 $ 1,219.5 $ 1,161.2
========= ========= ========= =========
</TABLE>

16. LEASE COMMITMENTS

Rental expenses for operating leases, including those related to the
discontinued operations of the Company, amounted to $22.2 million, $34.9 million
and $33.6 million in 1999, 1998 and 1997, respectively. These expenses relate
primarily to building leases of the Company. At December 31, 1999, future
minimum rental payments under non-cancelable operating leases were approximately
$39.9 million, payable as follows: 2000 - $14.1 million; 2001 -- $12.7 million;
2002 -- $8.1 million; 2003 -- $3.6 million, and $1.4 million thereafter. It is
expected that, in the normal course of business, leases that expire will be
renewed or replaced by leases on other property and equipment; thus, it is
anticipated that future minimum lease commitments will not be less than the
amounts shown for 2000.

F-39
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

17. REINSURANCE

In the normal course of business, the Company seeks to reduce the losses that
may arise from catastrophes or other events that cause unfavorable underwriting
results by reinsuring certain levels of risk in various areas of exposure with
other insurance enterprises or reinsurers. Reinsurance transactions are
accounted for in accordance with the provisions of Statement of Financial
Accounting Standards No. 113, Accounting and Reporting for Reinsurance of Short
Duration and Long Duration Contracts.

Amounts recoverable from reinsurers are estimated in a manner consistent with
the claim liability associated with the reinsured policy. Reinsurance contracts
do not relieve the Company from its obligations to policyholders. Failure of
reinsurers to honor their obligations could result in losses to the Company;
consequently, allowances are established for amounts deemed uncollectible. The
Company determines the appropriate amount of reinsurance based on evaluation of
the risks accepted and analyses prepared by consultants and reinsurers and on
market conditions (including the availability and pricing of reinsurance). The
Company also believes that the terms of its reinsurance contracts are consistent
with industry practice in that they contain standard terms with respect to lines
of business covered, limit and retention, arbitration and occurrence. Based on
its review of its reinsurers' financial statements and reputations in the
reinsurance marketplace, the Company believes that its reinsurers are
financially sound.

Effective January 1, 1999, Allmerica P&C entered into a whole account aggregate
excess of loss reinsurance agreement with a highly rated insurer (See Note 5).
Prior to the AFC corporate reorganization, the Company was subject to
concentration of risk with respect to this reinsurance agreement, which
represented 10% or more of the Company's reinsurance business. Net premiums
earned and losses and loss adjustment expenses ceded under this agreement in
1999 were $21.9 million and $35.0 million, respectively. In addition, the
Company is subject to concentration of risk with respect to reinsurance ceded to
various residual market mechanisms. As a condition to the ability to conduct
certain business in various states, the Company is required to participate in
various residual market mechanisms and pooling arrangements which provide
various insurance coverages to individuals or other entities that are otherwise
unable to purchase such coverage voluntarily provided by private insurers. These
market mechanisms and pooling arrangements include the Massachusetts
Commonwealth Automobile Reinsurers ("CAR"), the Maine Workers' Compensation
Residual Market Pool ("MWCRP") and the Michigan Catastrophic Claims Association
("MCCA"). Prior to the AFC corporate reorganization, both CAR and MCCA
represented 10% or more of the Company's reinsurance business. As a servicing
carrier in Massachusetts, the Company ceded a significant portion of its private
passenger and commercial automobile premiums to CAR. Net premiums earned and
losses and loss adjustment expenses ceded to CAR in 1999, 1998 and 1997 were
$20.4 million and $21.4 million, $34.3 million and $38.1 million, and $32.3
million and $28.2 million, respectively. The Company ceded to MCCA premiums
earned and losses and loss adjustment expenses in 1999, 1998 and 1997 of $1.8
million and $30.6 million, $3.7 million and $18.0 million, and $9.8 million and
$(0.8) million, respectively.

On June 2, 1998, the Company recorded a $124.2 million one-time reduction of its
direct and ceded written premiums as a result of a return of excess surplus from
MCCA. This transaction had no impact on the total net premiums recorded by the
Company in 1998.

Because the MCCA is supported by assessments permitted by statute, and all
amounts billed by the Company to CAR, MWCRP and MCCA have been paid when due,
the Company believes that it has no significant exposure to uncollectible
reinsurance balances.

F-40
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The effects of reinsurance were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
(IN MILLIONS) 1999 1998 1997
- ------------- -------- -------- --------
<S> <C> <C> <C>
Life and accident and health insurance premiums:
Direct.................................................... $ 53.5 $ 51.4 $ 55.9
Assumed................................................... 0.7 0.7 0.6
Ceded..................................................... (50.0) (47.8) (29.1)
-------- -------- --------
Net premiums................................................ $ 4.2 $ 4.3 $ 27.4
======== ======== ========
Property and casualty premiums written:
Direct.................................................... $1,089.0 $1,970.4 $2,068.5
Assumed................................................... 27.3 58.8 103.1
Ceded..................................................... (135.4) (74.1) (179.8)
-------- -------- --------
Net premiums................................................ $ 980.9 $1,955.1 $1,991.8
======== ======== ========
Property and casualty premiums earned:
Direct.................................................... $1,047.3 $1,966.8 $2,046.1
Assumed................................................... 30.3 64.5 102.0
Ceded..................................................... (127.3) (66.1) (195.1)
-------- -------- --------
Net premiums................................................ $ 950.3 $1,965.2 $1,953.0
======== ======== ========
Life insurance and other individual policy benefits, claims,
losses and loss adjustment expenses:
Direct.................................................... $ 391.9 $ 359.5 $ 397.4
Assumed................................................... 0.1 0.3 0.4
Ceded..................................................... (39.2) (49.5) (79.4)
-------- -------- --------
Net policy benefits, claims, losses and loss adjustment
expenses.................................................. $ 352.8 $ 310.3 $ 318.4
======== ======== ========
Property and casualty benefits, claims, losses and loss
adjustment expenses:
Direct.................................................... $ 805.6 $1,588.2 $1,464.9
Assumed................................................... 25.9 62.7 101.2
Ceded..................................................... (128.0) (158.2) (120.6)
-------- -------- --------
Net policy benefits, claims, losses, and loss adjustment
expenses.................................................. $ 703.5 $1,492.7 $1,445.5
======== ======== ========
</TABLE>

F-41
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

18. DEFERRED POLICY ACQUISITION COSTS

The following reflects the changes to the deferred policy acquisition asset:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
(IN MILLIONS) 1999 1998 1997
- ------------- -------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year................................ $1,161.2 $ 965.5 $ 822.7
Acquisition expenses deferred............................... 419.2 638.2 614.3
Amortized to expense during the year........................ (240.9) (449.6) (472.6)
Adjustment for discontinued operations...................... 3.4 ( 0.2) --
Adjustment to equity during the year........................ 39.3 7.3 (11.1)
Adjustment due to distribution of subsidiaries.............. (162.7) -- --
Adjustment for cession of disability income insurance....... -- -- (38.6)
Adjustment for revision of universal and variable universal
life insurance mortality assumptions...................... -- -- 50.8
-------- -------- --------
Balance at end of year...................................... $1,219.5 $1,161.2 $ 965.5
======== ======== ========
</TABLE>

At October 1, 1997, the Company revised the mortality assumptions for universal
life and variable universal life product lines. These revisions resulted in a
$50.8 million recapitalization of deferred policy acquisition costs.

19. LIABILITIES FOR OUTSTANDING CLAIMS, LOSSES AND LOSS ADJUSTMENT EXPENSES

The Company regularly updates its estimates of liabilities for outstanding
claims, losses and loss adjustment expenses as new information becomes available
and further events occur which may impact the resolution of unsettled claims for
its property and casualty and its accident and health lines of business. Changes
in prior estimates are recorded in results of operations in the year such
changes are determined to be needed.

The liability for future policy benefits and outstanding claims, losses and loss
adjustment expenses related to the Company's accident and health business was
$601.3 million and $568.0 million at December 31, 1999 and 1998, respectively.
Accident and health claim liabilities were re-estimated for all prior years and
were increased by $51.2 million and $14.6 million in 1999 and 1998,
respectively. The increase in 1999 resulted from the Company's reserve
strengthening primarily in the EBS and reinsurance pool business. The 1998
increase also resulted from the Company's reserve strengthening, primarily in
the assumed reinsurance and stop loss only business.

F-42
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table provides a reconciliation of the beginning and ending
property and casualty reserve for unpaid losses and loss adjustment expenses
(LAE):

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
(IN MILLIONS) 1999 1998 1997
- ------------- -------- -------- --------
<S> <C> <C> <C>
Reserve for losses and LAE, beginning of the year........... $2,597.3 $2,615.4 $2,744.1
Incurred losses and LAE, net of reinsurance recoverable:
Provision for insured events of the current year.......... 795.6 1,609.0 1,564.1
Decrease in provision for insured events of prior years... (96.1) (127.2) (127.9)
-------- -------- --------
Total incurred losses and LAE............................... 699.5 1,481.8 1,436.2
-------- -------- --------
Payments, net of reinsurance recoverable:
Losses and LAE attributable to insured events of current
year.................................................... 342.1 871.9 775.1
Losses and LAE attributable to insured events of prior
years................................................... 424.2 643.0 732.1
-------- -------- --------
Total payments 766.3 1,514.9 1,507.2
Change in reinsurance recoverable on unpaid losses.......... 44.3 15.0 (50.2)
Distribution of subsidiaries................................ (2,574.8) -- --
Other (1)................................................... -- -- (7.5)
-------- -------- --------
Reserve for losses and LAE, end of year..................... $ -- $2,597.3 $2,615.4
======== ======== ========
</TABLE>

(1) Includes purchase accounting adjustments.

As part of an ongoing process, the reserves have been re-estimated for all prior
accident years and were decreased by $96.1 million, $127.2 million and $127.9
million in 1999, 1998 and 1997, respectively, reflecting increased favorable
development on reserves for both losses and loss adjustment expenses.

Favorable development on prior years' loss reserves was $52.0 million, $58.9
million, and $87.2 million prior to the AFC corporate reorganization in 1999 and
for the years ended December 31, 1998 and 1997, respectively. Favorable
development on prior year's loss adjustment expense reserves was $44.1 million,
$68.3 million, and $40.7 million prior to the AFC corporate reorganization in
1999 and for the years ended December 31, 1998 and 1997, respectively. The
increase in favorable development 1998 is primarily attributable to claims
process improvement initiatives taken by the Company. The Company has lowered
claim settlement costs through increased utilization of in-house attorneys and
consolidation of claim offices.

This favorable development reflects the Company's reserving philosophy
consistently applied over these periods. Conditions and trends that have
affected development of the loss and LAE reserves in the past may not
necessarily occur in the future.

Due to the nature of the business written by the Risk Management segment, the
exposure to environmental liabilities is relatively small and therefore its
reserves are relatively small compared to other types of liabilities. Due to the
AFC corporate reorganization, the Company had no exposure for this item at
December 31, 1999. Loss and LAE reserves related to environmental damage and
toxic tort liability, included in the reserve for losses and LAE, were $49.9
million and $53.1 million, net of reinsurance of $14.2 million and $15.7 million
in 1998 and 1997, respectively. The Company does not specifically underwrite
policies that include this coverage, but as case law expands policy provisions
and insurers' liability beyond the intended coverage, the Company may be
required to defend such claims. The Company estimated its ultimate liability for
these claims based upon currently known facts, reasonable assumptions where the
facts are not known,

F-43
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

current law and methodologies currently available. Although these claims are not
significant, their existence gives rise to uncertainty and is discussed because
of the possibility, however remote, that they may become significant. The
Company believes that, notwithstanding the evolution of case law expanding
liability in environmental claims, recorded reserves related to these claims are
adequate. In addition, the Company is not aware of any litigation or pending
claims that may result in additional material liabilities in excess of recorded
reserves. The environmental liability could be revised in the near term if the
estimates used in determining the liability are revised.

20. MINORITY INTEREST

As a result of the Company's divestiture of certain of its subsidiaries
including its 84.5% ownership of the outstanding shares of the common stock of
Allmerica P&C effective July 1, 1999, there is no minority interest reflected on
the Consolidated Balance Sheets as of December 31, 1999. In prior years, the
Company's interest in Allmerica P&C was represented by ownership of 70.0% and
65.8% of the outstanding shares of common stock at December 31, 1998 and 1997,
respectively. Earnings and shareholder's equity attributable to minority
shareholders are included in minority interest in the consolidated financial
statements through the period ended June 30, 1999 and for the years ended
December 31, 1998 and 1997.

21. CONTINGENCIES

REGULATORY AND INDUSTRY DEVELOPMENTS

Unfavorable economic conditions may contribute to an increase in the number of
insurance companies that are under regulatory supervision. This may result in an
increase in mandatory assessments by state guaranty funds, or voluntary payments
by solvent insurance companies to cover losses to policyholders of insolvent or
rehabilitated companies. Mandatory assessments, which are subject to statutory
limits, can be partially recovered through a reduction in future premium taxes
in some states. The Company is not able to reasonably estimate the potential
effect on it of any such future assessments or voluntary payments.

LITIGATION

In July 1997, a lawsuit on behalf of a putative class was instituted in
Louisiana against AFC and certain of its subsidiaries, including FAFLIC, by
individual plaintiffs alleging fraud, unfair or deceptive acts, breach of
contract, misrepresentation, and related claims in the sale of life insurance
policies. In October 1997, the plaintiffs voluntarily dismissed the Louisiana
suit and filed a substantially similar action in Federal District Court in
Worcester, Massachusetts. In early November 1998, the Company and the plaintiffs
entered into a settlement agreement. The court granted preliminary approval of
the settlement on December 4, 1998. On May 19, 1999, the court issued an order
certifying the class for settlement purposes and granting final approval of the
settlement agreement. FAFLIC recognized a $31.0 million pre-tax expense during
the third quarter of 1998 related to this litigation. Although the Company
believes that this expense reflects appropriate recognition of its obligation
under the settlement, this estimate assumes the availability of insurance
coverage for certain claims, and the estimate may be revised based on the amount
of reimbursement actually tendered by AFC's insurance carriers, and based on
changes in the Company's estimate of the ultimate cost of the benefits to be
provided to members of the class.

The Company has been named a defendant in various other legal proceedings
arising in the normal course of business. In the Company's opinion, based on the
advice of legal counsel, the ultimate resolution of these proceedings will not
have a material effect on the Company's consolidated financial statements.
However,

F-44
<PAGE>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

(A WHOLLY-OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

liabilities related to these proceedings could be established in the near term
if estimates of the ultimate resolution of these proceedings are revised.

YEAR 2000

The Year 2000 issue resulted from computer programs being written using two
digits rather than four to define the applicable year. Computer programs that
have date-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business activities.

Although the Company does not believe that there is a material contingency
associated with the Year 2000 issue, there can be no assurance that exposure for
material contingencies will not arise.

22. STATUTORY FINANCIAL INFORMATION

The Company is required to file annual statements with state regulatory
authorities prepared on an accounting basis prescribed or permitted by such
authorities (statutory basis). Statutory surplus differs from shareholder's
equity reported in accordance with generally accepted accounting principles
primarily because policy acquisition costs are expensed when incurred,
investment reserves are based on different assumptions, postretirement benefit
costs are based on different assumptions and reflect a different method of
adoption, life insurance reserves are based on different assumptions and income
tax expense reflects only taxes paid or currently payable. In 1999, 49 out of 50
states have adopted the National Association of Insurance Commissioners proposed
Codification, which provides for uniform statutory accounting principles. These
principles are effective January 1, 2001. The Company is currently assessing the
impact that the adoption of Codification will have on its statutory results of
operations and financial position.

Statutory net income and surplus are as follows:

<TABLE>
<CAPTION>
(IN MILLIONS) 1999 1998 1997
- ------------- -------- -------- --------
<S> <C> <C> <C>
Statutory Net Income (Combined)
Property and Casualty Companies........................... $322.6 $ 180.7 $ 190.3
Life and Health Companies................................. 239.0 86.4 191.2

Statutory Shareholder's Surplus (Combined)
Property and Casualty Companies (See Note 3).............. $-- $1,269.3 $1,279.6
Life and Health Companies................................. 590.1 1,164.1 1,221.3
</TABLE>

F-45
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of First Allmerica Financial Life Insurance Company
and the Contractowners of the Allmerica Select Separate Account of First
Allmerica Financial Life Insurance Company

In our opinion, the accompanying statements of assets and liabilities, and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of each of the Sub-Accounts
constituting the Allmerica Select Separate Account of First Allmerica Financial
Life Insurance Company at December 31, 1999, the results of each of their
operations for the year then ended and the changes in each of their net assets
for each of the periods indicated, in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of First Allmerica Financial Life Insurance Company; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 1999 by correspondence with the Funds, provide a
reasonable basis for the opinion expressed above.

/s/ PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts
April 3, 2000
<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

STATEMENTS OF ASSETS AND LIABILITIES

DECEMBER 31, 1999

<TABLE>
<CAPTION>
Select
Aggressive Select Select Growth Select
Growth Growth and Income Income
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of Allmerica Investment Trust .................... $17,590,127 $27,650,698 $30,180,566 $14,162,921
Investments in shares of Fidelity Variable Insurance Products Fund (VIP) -- -- -- --
Investment in shares of T. Rowe Price International Series, Inc. ....... -- -- -- --
Receivable from First Allmerica Financial Life Insurance
Company (Sponsor) .................................................... -- -- 24,193 --
----------- ----------- ----------- -----------
Total assets ...................................................... 17,590,127 27,650,698 30,204,759 14,162,921

LIABILITIES:
Payable to First Allmerica Financial Life Insurance
Company (Sponsor) .................................................... -- -- -- 501
----------- ----------- ----------- -----------
Net assets ......................................................... $17,590,127 $27,650,698 $30,204,759 $14,162,420
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Net asset distribution by category:
Variable annuity contracts ........................................... $17,590,127 $27,650,698 $30,204,759 $14,162,420
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Units outstanding, December 31, 1999 ................................... 6,605,695 8,011,634 11,774,605 10,936,350
Net asset value per unit, December 31, 1999 ............................ $ 2.662873 $ 3.451318 $ 2.565246 $ 1.294986

Select Select
Money International Capital
Market Equity Appreciation
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments in shares of Allmerica Investment Trust .................... $14,117,150 $14,769,370 $ 7,536,868
Investments in shares of Fidelity Variable Insurance Products Fund (VIP) -- -- --
Investment in shares of T. Rowe Price International Series, Inc. ....... -- -- --
Receivable from First Allmerica Financial Life Insurance
Company (Sponsor) .................................................... -- -- --
----------- ----------- -----------
Total assets ...................................................... 14,117,150 14,769,370 7,536,868

LIABILITIES:
Payable to First Allmerica Financial Life Insurance
Company (Sponsor) .................................................... 371 -- --
----------- ----------- -----------
Net assets ......................................................... $14,116,779 $14,769,370 $ 7,536,868
----------- ----------- -----------
----------- ----------- -----------

Net asset distribution by category:
Variable annuity contracts ........................................... $14,116,779 $14,769,370 $ 7,536,868
----------- ----------- -----------
----------- ----------- -----------

Units outstanding, December 31, 1999 ................................... 11,367,138 7,071,841 3,247,184
Net asset value per unit, December 31, 1999 ............................ $ 1.241894 $ 2.088476 $ 2.321048
</TABLE>

The accompanying notes are an integral part of these financial statements.

SA-1
<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

STATEMENTS OF ASSETS AND LIABILITIES (Continued)

DECEMBER 31, 1999

<TABLE>
<CAPTION>
Select Select Select
Emerging Value Strategic Fidelity VIP
Markets Opportunity Growth High Income
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of Allmerica Investment Trust .................... $ 1,382,056 $ 2,592,109 $ 1,825,316 $ --
Investments in shares of Fidelity Variable Insurance Products Fund (VIP) -- -- -- 9,102,424
Investment in shares of T. Rowe Price International Series, Inc. ....... -- -- -- --
Receivable from First Allmerica Financial Life Insurance
Company (Sponsor) .................................................... -- -- -- --
------------ ------------ ------------ ------------
Total assets ...................................................... 1,382,056 2,592,109 1,825,316 9,102,424

Net asset distribution by category:
Variable annuity contracts ........................................... $ 1,382,056 $ 2,592,109 $ 1,825,316 $ 9,102,424
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

Units outstanding, December 31, 1999 ................................... 1,089,866 2,789,758 1,655,117 6,324,624
Net asset value per unit, December 31, 1999 ............................ $ 1.268098 $ 0.929152 $ 1.102832 $ 1.439204

T. Rowe Price
Fidelity VIP Fidelity VIP International
Equity-Income Growth Stock
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS:
Investments in shares of Allmerica Investment Trust .................... $ -- $ -- $ --
Investments in shares of Fidelity Variable Insurance Products Fund (VIP) 15,993,667 18,888,401 --
Investment in shares of T. Rowe Price International Series, Inc. ....... -- -- 6,106,822
Receivable from First Allmerica Financial Life Insurance
Company (Sponsor) .................................................... -- -- --
--------------- --------------- ---------------
Total assets ...................................................... 15,993,667 18,888,401 6,106,822

LIABILITIES:
Payable to First Allmerica Financial Life Insurance
Company (Sponsor) .................................................... -- -- --
--------------- --------------- ---------------
Net assets ......................................................... $ 15,993,667 $ 18,888,401 $ 6,106,822
--------------- --------------- ---------------
--------------- --------------- ---------------
Net asset distribution by category:
Variable annuity contracts ........................................... $ 15,993,667 $ 18,888,401 $ 6,106,822
--------------- --------------- ---------------
--------------- --------------- ---------------

Units outstanding, December 31, 1999 ................................... 8,172,505 5,956,838 3,324,438
Net asset value per unit, December 31, 1999 ............................ $ 1.957009 $ 3.170877 $ 1.836949
</TABLE>

The accompanying notes are an integral part of these financial statements.

SA-2
<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1999

SELECT
AGGRESSIVE SELECT SELECT GROWTH SELECT
GROWTH GROWTH AND INCOME INCOME
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ............................................. $ -- $ 11,436 $ 290,892 $ 911,463
----------- ----------- ----------- -----------

EXPENSES:
Mortality and expense risk fees ....................... 172,971 274,424 325,196 182,297
Administrative expense fees ........................... 21,379 33,918 40,193 22,531
----------- ----------- ----------- -----------
Total expenses ...................................... 194,350 308,342 365,389 204,828
----------- ----------- ----------- -----------

Net investment income (loss) ........................ (194,350) (296,906) (74,497) 706,635
----------- ----------- ----------- -----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors ... -- 726,747 1,951,397 111,810
Net realized gain (loss) from sales of investments .... 343,175 614,931 363,389 (93,603)
----------- ----------- ----------- -----------
Net realized gain (loss) ............................ 343,175 1,341,678 2,314,786 18,207
Net unrealized gain (loss) ............................ 4,519,016 4,808,788 1,733,590 (1,057,625)
----------- ----------- ----------- -----------

Net realized and unrealized gain (loss) ............. 4,862,191 6,150,466 4,048,376 (1,039,418)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets from operations $ 4,667,841 $ 5,853,560 $ 3,973,879 $ (332,783)
=========== =========== =========== ===========

SELECT SELECT
MONEY INTERNATIONAL CAPITAL
MARKET EQUITY APPRECIATION
-------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends ............................................. $552,449 $ -- $ --
-------- ----------- -----------

EXPENSES:
Mortality and expense risk fees ....................... 136,523 146,474 74,482
Administrative expense fees ........................... 16,874 18,103 9,206
-------- ----------- -----------
Total expenses ...................................... 153,397 164,577 83,688
-------- ----------- -----------

Net investment income (loss) ........................ 399,052 (164,577) (83,688)
-------- ----------- -----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors ... -- -- 9,140
Net realized gain (loss) from sales of investments .... -- 206,560 52,149
-------- ----------- -----------
Net realized gain (loss) ............................ -- 206,560 61,289
Net unrealized gain (loss) ............................ -- 3,258,194 1,404,704
-------- ----------- -----------

Net realized and unrealized gain (loss) ............. -- 3,464,754 1,465,993
-------- ----------- -----------
Net increase (decrease) in net assets from operations $399,052 $ 3,300,177 $ 1,382,305
======== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

SA-3

<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

STATEMENTS OF OPERATIONS (Continued)

FOR THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
SELECT SELECT SELECT
EMERGING VALUE STRATEGIC FIDELITY VIP
MARKETS OPPORTUNITY GROWTH HIGH INCOME
----------- ----------- ----------- -----------
INVESTMENT INCOME:
Dividends ............................................. $ 5,726 $ 12 $ 5,132 $ 698,798
----------- ----------- ----------- -----------

EXPENSES:
Mortality and expense risk fees ....................... 10,455 25,453 15,294 110,973
Administrative expense fees ........................... 1,293 3,146 1,890 13,716
----------- ----------- ----------- -----------
Total expenses ...................................... 11,748 28,599 17,184 124,689
----------- ----------- ----------- -----------

Net investment income (loss) ........................ (6,022) (28,587) (12,052) 574,109
----------- ----------- ----------- -----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors ... -- 115,269 -- 26,123
Net realized gain (loss) from sales of investments .... 17,349 (11,363) 6,115 (121,364)
----------- ----------- ----------- -----------
Net realized gain (loss) ............................ 17,349 103,906 6,115 (95,241)
Net unrealized gain (loss) ............................ 430,661 (181,986) 174,553 38,168
----------- ----------- ----------- -----------

Net realized and unrealized gain (loss) ............. 448,010 (78,080) 180,668 (57,073)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets from operations $ 441,988 $ (106,667) $ 168,616 $ 517,036
=========== =========== =========== ===========

T. ROWE PRICE
FIDELITY VIP FIDELITY VIP INTERNATIONAL
EQUITY-INCOME GROWTH STOCK
------------- ------ -----
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends ............................................. $164,674 $ 15,605 $ 21,974
-------- ----------- -----------

EXPENSES:
Mortality and expense risk fees ....................... 174,492 161,390 55,641
Administrative expense fees ........................... 21,567 19,947 6,877
-------- ----------- -----------
Total expenses ...................................... 196,059 181,337 62,518
-------- ----------- -----------

Net investment income (loss) ........................ (31,385) (165,732) (40,544)
-------- ----------- -----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain distributions from portfolio sponsors ... 364,016 981,162 69,061
Net realized gain (loss) from sales of investments .... 55,573 108,191 42,289
-------- ----------- -----------
Net realized gain (loss) ............................ 419,589 1,089,353 111,350
Net unrealized gain (loss) ............................ 49,099 3,363,837 1,365,554
-------- ----------- -----------

Net realized and unrealized gain (loss) ............. 468,688 4,453,190 1,476,904
-------- ----------- -----------
Net increase (decrease) in net assets from operations $437,303 $ 4,287,458 $ 1,436,360
======== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

SA-4

<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

SELECT
AGGRESSIVE GROWTH SELECT GROWTH
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................... (194,350) (156,301) (296,906) (184,003)
Net realized gain (loss) ........................................... 343,175 98,052 1,341,678 347,058
Net unrealized gain (loss) ......................................... 4,519,016 897,084 4,808,788 3,907,392
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from operations ............. 4,667,841 838,835 5,853,560 4,070,447
------------ ------------ ------------ ------------

FROM CONTRACT TRANSACTIONS:
Net purchase payments .............................................. 1,542,005 2,441,901 3,550,208 4,107,799
Withdrawals ........................................................ (892,464) (341,477) (1,259,953) (386,659)
Contract benefits .................................................. (33,192) (48,217) (134,721) (37,884)
Contract charges ................................................... (7,206) (6,180) (9,656) (6,803)
Transfers between sub-accounts (including fixed account), net ...... (339,364) 118,853 1,038,897 259,335
Other transfers from (to) the General Account ...................... 91,091 81,304 165,602 6,510
Net increase (decrease) in investment by Sponsor ................... - - - -
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from contract transactions ... 360,870 2,246,184 3,350,377 3,942,298
------------ ------------ ------------ ------------

Net increase (decrease) in net assets .............................. 5,028,711 3,085,019 9,203,937 8,012,745

NET ASSETS:
Beginning of year .................................................. 12,561,416 9,476,397 18,446,761 10,434,016
------------ ------------ ------------ ------------
End of year ........................................................$ 17,590,127 $ 12,561,416 $ 27,650,698 $ 18,446,761
============ ============ ============ ============

SELECT GROWTH AND INCOME SELECT INCOME
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------------ -------------
1999 1998 1999 1998
---- ---- ---- ----
<C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................... (74,497) (23,691) 706,635 495,101
Net realized gain (loss) ........................................... 2,314,786 257,034 18,207 61,430
Net unrealized gain (loss) ......................................... 1,733,590 2,145,693 (1,057,625) (19,957)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from operations ............. 3,973,879 2,379,036 (332,783) 536,574
------------ ------------ ------------ ------------

FROM CONTRACT TRANSACTIONS:
Net purchase payments .............................................. 4,416,766 5,406,939 4,305,976 6,345,431
Withdrawals ........................................................ (1,407,383) (801,875) (1,084,646) (414,565)
Contract benefits .................................................. (212,209) (79,461) (147,719) (45,760)
Contract charges ................................................... (9,770) (7,846) (4,978) (3,819)
Transfers between sub-accounts (including fixed account), net ...... 1,349,305 (224,356) (3,129,183) 552,578
Other transfers from (to) the General Account ...................... 292,719 18,691 (27,796) (7,507)
Net increase (decrease) in investment by Sponsor .................. - - - -
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from contract transactions .. 4,429,428 4,312,092 (88,346) 6,426,358
------------ ------------ ------------ ------------

Net increase (decrease) in net assets .............................. 8,403,307 6,691,128 (421,129) 6,962,932

NET ASSETS:
Beginning of year .................................................. 21,801,452 15,110,324 14,583,549 7,620,617
------------ ------------ ------------ ------------
End of year ........................................................ $ 30,204,759 $ 21,801,452 $ 14,162,420 $ 14,583,549
============ ============ ============ ============

MONEY MARKET
YEAR ENDED
DECEMBER 31,
------------
1999 1998
---- ----
<C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................... 399,052 307,371
Net realized gain (loss) ........................................... - -
Net unrealized gain (loss) ......................................... - -
------------ -----------
Net increase (decrease) in net assets from operations ............. 399,052 307,371
------------ -----------

FROM CONTRACT TRANSACTIONS:
Net purchase payments .............................................. 10,222,319 5,880,643
Withdrawals ........................................................ (1,734,538) (1,064,152)
Contract benefits .................................................. (243,550) (18,419)
Contract charges ................................................... (3,396) (2,822)
Transfers between sub-accounts (including fixed account), net ...... (4,624,219) (1,895,688)
Other transfers from (to) the General Account ...................... (388,968) 196,883
Net increase (decrease) in investment by Sponsor .................. - -
------------ -----------
Net increase (decrease) in net assets from contract transactions .. 3,227,648 3,096,445
------------ -----------

Net increase (decrease) in net assets .............................. 3,626,700 3,403,816

NET ASSETS:
Beginning of year .................................................. 10,490,079 7,086,263
------------ -----------
End of year ........................................................ $ 14,116,779 $10,490,079
============ ===========

</TABLE>

The accompanying notes are an integral part of these financial statements.

SA-5

<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS (Continued)

SELECT SELECT
INTERNATIONAL EQUITY CAPITAL APPRECIATION
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
-------------------- --------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................... (164,577) 2,050 (83,688) (55,213)
Net realized gain (loss) ........................................... 206,560 82,145 61,289 812,605
Net unrealized gain (loss) ......................................... 3,258,194 1,042,008 1,404,704 (265,474)
------------ ------------ ----------- -----------
Net increase (decrease) in net assets from operations ............. 3,300,177 1,126,203 1,382,305 491,918
------------ ------------ ----------- -----------

FROM CONTRACT TRANSACTIONS:
Net purchase payments .............................................. 2,093,409 2,245,544 1,537,163 1,525,487
Withdrawals ........................................................ (673,943) (284,540) (375,491) (122,872)
Contract benefits .................................................. (45,035) (16,583) (35,495) (53,921)
Contract charges ................................................... (5,764) (4,933) (3,363) (2,530)
Transfers between sub-accounts (including fixed account), net ...... (85,673) (4,484) (17,141) 30,578
Other transfers from (to) the General Account ...................... 69,302 (129,017) 50,763 (71,019)
Net increase (decrease) in investment by Sponsor .................. - - - -
------------ ------------ ----------- -----------
Net increase (decrease) in net assets from contract transactions .. 1,352,296 1,805,987 1,156,436 1,305,723
------------ ------------ ----------- -----------

Net increase (decrease) in net assets .............................. 4,652,473 2,932,190 2,538,741 1,797,641

NET ASSETS:
Beginning of year .................................................. 10,116,897 7,184,707 4,998,127 3,200,486
------------ ------------ ----------- -----------
End of year ........................................................$ 14,769,370 $ 10,116,897 $ 7,536,868 $ 4,998,127
============ ============ =========== ===========

SELECT SELECT
EMERGING MARKETS VALUE OPPORTUNITY
YEAR PERIOD YEAR PERIOD
ENDED FROM 2/20/98* ENDED FROM 2/20/98*
12/31/99 TO 12/31/98 12/31/99 TO 12/31/98
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................... (6,022) (1,905) (28,587) 3,568
Net realized gain (loss) ........................................... 17,349 (4,147) 103,906 (3,950)
Net unrealized gain (loss) ......................................... 430,661 (39,804) (181,986) 7,156
----------- --------- ----------- -----------
Net increase (decrease) in net assets from operations ............. 441,988 (45,856) (106,667) 6,774
----------- --------- ----------- -----------

FROM CONTRACT TRANSACTIONS:
Net purchase payments .............................................. 378,796 394,788 1,033,260 1,145,004
Withdrawals ........................................................ (75,657) (4,004) (131,253) (10,533)
Contract benefits .................................................. (5,416) - (66,268) -
Contract charges ................................................... (262) (4) (647) (5)
Transfers between sub-accounts (including fixed account), net ...... 133,184 83,289 453,605 144,521
Other transfers from (to) the General Account ...................... 58,004 23,199 58,737 65,578
Net increase (decrease) in investment by Sponsor .................. --- 7 - 3
----------- --------- ----------- -----------
Net increase (decrease) in net assets from contract transactions .. 488,649 497,275 1,347,434 1,344,568
----------- --------- ----------- -----------

Net increase (decrease) in net assets .............................. 930,637 451,419 1,240,767 1,351,342

NET ASSETS:
Beginning of year .................................................. 451,419 - 1,351,342 -
----------- --------- ----------- -----------
End of year ........................................................$ 1,382,056 $ 451,419 $ 2,592,109 $ 1,351,342
=========== ========= =========== ===========

SELECT
STRATEGIC GROWTH
YEAR PERIOD
ENDED FROM 2/20/98*
12/31/99 TO 12/31/98
-------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................... (12,052) (2,283)
Net realized gain (loss) ........................................... 6,115 (4,247)
Net unrealized gain (loss) ......................................... 174,553 4,002
----------- ---------
Net increase (decrease) in net assets from operations ............. 168,616 (2,528)
----------- ---------

FROM CONTRACT TRANSACTIONS:
Net purchase payments .............................................. 1,063,800 598,039
Withdrawals ........................................................ (27,118) (11,642)
Contract benefits .................................................. (22,091) -
Contract charges ................................................... (298) (21)
Transfers between sub-accounts (including fixed account), net ...... (51,294) 60,193
Other transfers from (to) the General Account ...................... 24,877 24,779
Net increase (decrease) in investment by Sponsor .................. - 4
----------- ---------
Net increase (decrease) in net assets from contract transactions .. 987,876 671,352
----------- ---------

Net increase (decrease) in net assets .............................. 1,156,492 668,824

NET ASSETS:
Beginning of year .................................................. 668,824 -
----------- ---------
End of year ........................................................ $ 1,825,316 $ 668,824
=========== =========
</TABLE>

* Date of initial investment.

The accompanying notes are an integral part of these financial statements.

SA-6

<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS (Continued)

FIDELITY VIP HIGH INCOME FIDELITY VIP EQUITY-INCOME
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------------ --------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................... 574,109 229,070 (31,385) (33,415)
Net realized gain (loss) ........................................... (95,241) 165,505 419,589 349,484
Net unrealized gain (loss) ......................................... 38,168 (897,298) 49,099 334,416
----------- ----------- ------------ ------------
Net increase (decrease) in net assets from operations ............. 517,036 (502,723) 437,303 650,485
----------- ----------- ------------ ------------

FROM CONTRACT TRANSACTIONS:
Net purchase payments .............................................. 2,596,050 3,619,399 3,294,962 4,401,675
Withdrawals ........................................................ (548,073) (469,859) (641,817) (268,598)
Contract benefits .................................................. (206,386) (31,220) (95,911) (114,173)
Contract charges ................................................... (3,278) (2,289) (5,717) (3,911)
Transfers between sub-accounts (including fixed account), net ...... (500,961) 477,001 2,040,773 203,743
Other transfers from (to) the General Account ...................... 148,298 71,054 176,914 117,505
Net increase (decrease) in investment by Sponsor .................. - - - -
----------- ----------- ------------ ------------
Net increase (decrease) in net assets from contract transactions .. 1,485,650 3,664,086 4,769,204 4,336,241
----------- ----------- ------------ ------------

Net increase (decrease) in net assets .............................. 2,002,686 3,161,363 5,206,507 4,986,726

NET ASSETS:
Beginning of year .................................................. 7,099,738 3,938,375 10,787,160 5,800,434
----------- ----------- ------------ ------------
End of year ........................................................ $ 9,102,424 $ 7,099,738 $ 15,993,667 $ 10,787,160
=========== =========== ============ ============

T. ROWE PRICE
FIDELITY VIP GROWTH INTERNATIONAL STOCK
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................... (165,732) (63,622) (40,544) 1,007
Net realized gain (loss) ........................................... 1,089,353 644,150 111,350 39,848
Net unrealized gain (loss) ......................................... 3,363,837 1,357,167 1,365,554 300,244
------------ ----------- ----------- -----------
Net increase (decrease) in net assets from operations ............. 4,287,458 1,937,695 1,436,360 341,099
------------ ----------- ----------- -----------

FROM CONTRACT TRANSACTIONS:
Net purchase payments .............................................. 4,006,497 2,760,118 769,715 1,182,338
Withdrawals ........................................................ (593,288) (161,829) (207,337) (69,415)
Contract benefits .................................................. (143,732) (78,540) (22,515) (26,347)
Contract charges ................................................... (5,026) (2,884) (2,030) (1,415)
Transfers between sub-accounts (including fixed account), net ...... 2,804,696 115,915 489,064 78,521
Other transfers from (to) the General Account ...................... 186,145 35,742 23,553 44,342
Net increase (decrease) in investment by Sponsor .................. - - - -
------------ ----------- ----------- -----------
Net increase (decrease) in net assets from contract transactions .. 6,255,292 2,668,522 1,050,450 1,208,024
------------ ----------- ----------- -----------

Net increase (decrease) in net assets .............................. 10,542,750 4,606,217 2,486,810 1,549,123

NET ASSETS:
Beginning of year .................................................. 8,345,651 3,739,434 3,620,012 2,070,889
------------ ----------- ----------- -----------
End of year ........................................................ $ 18,888,401 $ 8,345,651 $ 6,106,822 $ 3,620,012
============ =========== =========== ===========

</TABLE>

The accompanying notes are an integral part of these financial statements.

SA-7

<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION

Allmerica Select Separate Account (Allmerica Select) is a separate
investment account of First Allmerica Financial Life Insurance Company (the
Company), established on April 1, 1994 for the purpose of separating from the
general assets of the Company those assets used to fund certain variable annuity
contracts issued by the Company. The Company is a wholly-owned subsidiary of
Allmerica Financial Corporation (AFC). Under applicable insurance law, the
assets and liabilities of Allmerica Select are clearly identified and
distinguished from the other assets and liabilities of the Company. Allmerica
Select cannot be charged with liabilities arising out of any other business of
the Company.

Allmerica Select is registered as a unit investment trust under the
Investment Company Act of 1940, as amended (the 1940 Act). Allmerica Select
currently offers fourteen Sub-Accounts. Each Sub-Account invests exclusively in
a corresponding investment portfolio of the Allmerica Investment Trust (the
Trust) managed by Allmerica Financial Investment Management Services, Inc.
(AFIMS) , an indirect wholly-owned subsidiary of the Company; or of the Variable
Insurance Products Fund (Fidelity VIP) managed by Fidelity Management & Research
Company (FMR); or of the T. Rowe Price International Series, Inc. (T. Rowe
Price) managed by Rowe Price-Fleming International, Inc. The Trust, Fidelity
VIP, and T. Rowe Price (the Funds) are open-end, diversified management
investment companies registered under the 1940 Act.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

INVESTMENTS - Security transactions are recorded on the trade date.
Investments held by the Sub-Accounts are stated at the net asset value per share
of the respective investment portfolio of the Funds. Realized gains and losses
on securities sold are determined using the average cost method. Dividends and
capital gain distributions are recorded on the ex-dividend date and are
reinvested in additional shares of the respective investment portfolio of the
Funds at net asset value.

FEDERAL INCOME TAXES - The Company is taxed as a "life insurance company"
under Subchapter L of the Internal Revenue Code (the Code) and files a
consolidated federal income tax return. The Company anticipates no tax liability
resulting from the operations of Allmerica Select. Therefore, no provision for
income taxes has been charged against Allmerica Select.

SA-8
<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE 3 - INVESTMENTS

The number of shares owned, aggregate cost, and net asset value per share
of each Sub-Account's investment in the Funds at December 31, 1999 were as
follows:

PORTFOLIO INFORMATION
---------------------------------------------------------
NET ASSET
NUMBER OF AGGREGATE VALUE
INVESTMENT PORTFOLIO SHARES COST PER SHARE
----------------- ----------------- --------------
<S> <C> <C> <C>
Select Aggressive Growth...................... 5,156,883 $ 10,977,388 $ 3.411
Select Growth................................. 9,068,776 17,199,415 3.049
Select Growth and Income...................... 15,613,330 24,556,957 1.933
Select Income................................. 14,861,408 15,029,676 0.953
Money Market.................................. 14,117,150 14,117,150 1.000
Select International Equity................... 7,271,969 9,974,290 2.031
Select Capital Appreciation................... 3,671,149 5,974,642 2.053
Select Emerging Markets....................... 1,069,703 991,197 1.292
Select Value Opportunity...................... 1,704,214 2,766,940 1.521
Select Strategic Growth....................... 1,621,062 1,646,761 1.126
Fidelity VIP High Income...................... 804,812 9,579,537 11.310
Fidelity VIP Equity-Income.................... 622,080 14,768,388 25.710
Fidelity VIP Growth........................... 343,863 13,658,865 54.930
T. Rowe Price International Stock............. 320,736 4,395,612 19.040
</TABLE>

NOTE 4 - RELATED PARTY TRANSACTIONS

The Company makes a charge of 1.25% per annum based on the average daily
net assets of each Sub-Account at each valuation date for mortality and expense
risks. The Company also charges each Sub-Account 0.15% per annum based on the
average daily net assets of each Sub-Account for administrative expenses. These
charges are deducted from the daily value of each Sub-Account and are paid to
the Company on a daily basis.

For contracts issued on Form A3020-92 (Allmerica Select Resource I), a
contract fee is deducted on the contract anniversary and upon full surrender of
the contract. For contracts issued on Form A3025-96 (Allmerica Select Resource
II), a contract fee is deducted on the contract anniversary and upon full
surrender if the accumulated value is less than $50,000. For contracts issued on
Form A3027-98 (Allmerica Select Charter), a contract fee is deducted on the
contract anniversary and upon full surrender if the accumulated value is less
than $75,000. The fee is currently waived for Allmerica Select Resource II
contracts issued to and maintained by the trustee of a 401(k) plan.

Allmerica Investments, Inc., (Allmerica Investments), an indirect
wholly-owned subsidiary of the Company, is the principal underwriter and general
distributor of Allmerica Select, and does not receive any compensation for sales
of the contracts. Commissions are paid by the Company to registered
representatives of certain independent broker-dealers. The Allmerica Select
Resource I and II contracts have a contingent deferred sales charge and no
deduction is made for sales charges at the time of the sale.

SA-9
<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE 5 - CONTRACTOWNERS AND SPONSOR TRANSACTIONS

Transactions from contractowners and sponsor were as follows:

YEAR ENDED DECEMBER 31,
1999 1998
-------------------------------------- ------------------------------------
UNITS AMOUNT UNITS AMOUNT
----------------- ----------------- -------------- -------------------
<S> <C> <C> <C> <C>
Select Aggressive Growth
Issuance of Units.......................... 1,288,438 $ 2,727,795 2,101,768 $ 3,936,189
Redemption of Units........................ (1,132,178) (2,366,925) (957,286) (1,690,005)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 156,260 $ 360,870 1,144,482 $ 2,246,184
================= ================= ============== ===================

Select Growth
Issuance of Units.......................... 2,507,080 $ 7,046,398 2,730,612 $ 6,281,672
Redemption of Units........................ (1,336,247) (3,696,021) (1,057,929) (2,339,374)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 1,170,833 $ 3,350,377 1,672,683 $ 3,942,298
================= ================= ============== ===================

Select Growth and Income
Issuance of Units.......................... 3,405,403 $ 7,979,976 3,667,631 $ 7,514,504
Redemption of Units........................ (1,555,002) (3,550,548) (1,640,818) (3,202,412)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 1,850,401 $ 4,429,428 2,026,813 $ 4,312,092
================= ================= ============== ===================

Select Income
Issuance of Units.......................... 4,966,502 $ 6,226,766 8,416,901 $ 10,819,448
Redemption of Units........................ (5,039,471) (6,315,112) (3,468,453) (4,393,090)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. (72,969) $ (88,346) 4,948,448 $ 6,426,358
================= ================= ============== ===================

Money Market
Issuance of Units.......................... 12,869,583 $ 14,942,827 7,584,558 $ 8,923,916
Redemption of Units........................ (10,262,991) (11,715,179) (4,981,285) (5,827,471)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 2,606,592 $ 3,227,648 2,603,273 $ 3,096,445
================= ================= ============== ===================

Select International Equity
Issuance of Units.......................... 1,632,828 $ 2,994,444 2,034,438 $ 3,122,371
Redemption of Units........................ (852,167) (1,642,148) (875,449) (1,316,384)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 780,661 $ 1,352,296 1,158,989 $ 1,805,987
================= ================= ============== ===================

Select Capital Appreciation
Issuance of Units.......................... 1,161,062 $ 2,240,824 1,379,306 $ 2,337,529
Redemption of Units........................ (575,724) (1,084,388) (631,628) (1,031,806)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 585,338 $ 1,156,436 747,678 $ 1,305,723
================= ================= ============== ===================

Select Emerging Markets
Issuance of Units.......................... 744,444 $ 713,738 615,779 $ 517,744
Redemption of Units........................ (236,288) (225,089) (34,069) (20,469)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 508,156 $ 488,649 581,710 $ 497,275
================= ================= ============== ===================

Select Value Opportunity
Issuance of Units.......................... 1,989,327 $ 1,859,088 1,445,434 $ 1,413,471
Redemption of Units........................ (566,212) (511,654) (78,791) (68,903)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 1,423,115 $ 1,347,434 1,366,643 $ 1,344,568
================= ================= ============== ===================

SA-10
<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE 5 - CONTRACTOWNERS AND SPONSOR TRANSACTIONS (Continued)

YEAR ENDED DECEMBER 31,
1999 1998
-------------------------------------- ------------------------------------
UNITS AMOUNT UNITS AMOUNT
----------------- ----------------- -------------- -------------------
<S> <C> <C> <C> <C>
Select Strategic Growth
Issuance of Units.......................... 1,261,036 $ 1,280,343 739,435 $ 711,886
Redemption of Units........................ (299,949) (292,467) (45,405) (40,534)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 961,087 $ 987,876 694,030 $ 671,352
================= ================= ============== ===================

Fidelity VIP High Income
Issuance of Units.......................... 2,918,757 $ 4,025,329 3,300,126 $ 4,794,054
Redemption of Units........................ (1,854,873) (2,539,679) (792,654) (1,129,968)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 1,063,884 $ 1,485,650 2,507,472 $ 3,664,086
================= ================= ============== ===================

Fidelity VIP Equity-Income
Issuance of Units.......................... 3,349,652 $ 6,491,966 3,505,845 $ 6,320,675
Redemption of Units........................ (956,139) (1,722,762) (1,147,644) (1,984,434)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 2,393,513 $ 4,769,204 2,358,201 $ 4,336,241
================= ================= ============== ===================

Fidelity VIP Growth
Issuance of Units.......................... 2,995,401 $ 7,719,228 2,171,242 $ 4,228,390
Redemption of Units........................ (605,269) (1,463,936) (802,937) (1,559,868)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 2,390,132 $ 6,255,292 1,368,305 $ 2,668,522
================= ================= ============== ===================

T Rowe Price International Stock
Issuance of Units.......................... 1,071,365 $ 1,525,440 1,189,475 $ 1,590,309
Redemption of Units........................ (337,489) (474,990) (292,129) (382,285)
----------------- ----------------- -------------- -------------------
Net increase (decrease).................. 733,876 $ 1,050,450 897,346 $ 1,208,024
================= ================= ============== ===================
</TABLE>

NOTE 6 - DIVERSIFICATION REQUIREMENTS

Under the provisions of Section 817(h) of the Code, a variable annuity
contract, other than a contract issued in connection with certain types of
employee benefit plans, will not be treated as an annuity contract for federal
income tax purposes for any period for which the investments of the segregated
asset account on which the contract is based are not adequately diversified. The
Code provides that the "adequately diversified" requirement may be met if the
underlying investments satisfy either a statutory safe harbor test or
diversification requirements set forth in regulations issued by the Secretary of
The Treasury.

The Internal Revenue Service has issued regulations under Section 817(h)
of the Code. The Company believes that Allmerica Select satisfies the current
requirements of the regulations, and it intends that Allmerica Select will
continue to meet such requirements.

SA-11
<PAGE>

ALLMERICA SELECT SEPARATE ACCOUNT

NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE 7 - PURCHASES AND SALES OF SECURITIES

Cost of purchases and proceeds from sales of shares of the Funds by
Allmerica Select during the year ended December 31, 1999 were as follows:

INVESTMENT PORTFOLIO PURCHASES SALES
- -------------------- ----------------- -----------------
<S> <C> <C>
Select Aggressive Growth..................... $1,638,369 $ 1,471,849
Select Growth................................ 5,877,912 2,097,694
Select Growth and Income..................... 8,339,540 2,057,405
Select Income................................ 4,932,188 4,201,588
Money Market................................. 11,409,678 7,782,607
Select International Equity.................. 2,200,839 1,013,120
Select Capital Appreciation.................. 1,798,814 716,926
Select Emerging Markets...................... 627,960 145,333
Select Value Opportunity..................... 1,778,862 344,746
Select Strategic Growth...................... 1,217,404 241,580
Fidelity VIP High Income..................... 3,828,930 1,743,048
Fidelity VIP Equity-Income................... 5,699,298 597,463
Fidelity VIP Growth.......................... 7,726,930 656,208
T. Rowe Price International Stock............ 1,388,542 309,575
----------------- -----------------
Totals..................................... $58,465,266 $ 23,379,142
================= =================
</TABLE>

NOTE 8 - PLAN OF SUBSTITUTION FOR PORTFOLIO OF THE TRUST

An application has been filed with the Securities and Exchange Commission
(SEC) seeking an order approving the substitution of shares of the Select
Investment Grade Income Fund (SIGIF) for all of the shares of the Select Income
Fund (SIF). To the extent required by law, approvals of such substitution will
also be obtained from the state insurance regulators in certain jurisdictions.
The effect of the substitution will be to replace SIF shares with SIGIF shares.
The substitution is planned to be effective on or about July 1, 2000.

SA-12

<PAGE>

PART C. OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) FINANCIAL STATEMENTS

Financial Statements Included in Part A
None

Financial Statements Included in Part B
Financial Statements for First Allmerica Financial Life Insurance Company
Financial Statements for Allmerica Select Separate Account of First
Allmerica Financial Life Insurance Company

Financial Statements Included in Part C
None

(b) EXHIBITS

EXHIBIT 1 Vote of Board of Directors Authorizing Establishment of
Registrant dated August 20, 1991 was previously filed on April
24, 1998 in Post-Effective Amendment No. 12 of Registration
Statement No. 33-71058/811-8116, and is incorporated by
reference herein.

EXHIBIT 2 Not Applicable. Pursuant to Rule 26a-2, the Insurance
Company may hold the assets of the Registrant NOT pursuant to
a trust indenture or other such instrument.

EXHIBIT 3 (a) Underwriting and Administrative Services Agreement was
previously filed on April 24, 1998 in Post-Effective
Amendment No. 12 of Registration Statement No.
33-71058/811-8116, and is incorporated by reference
herein.

(b) Form of Revised Commission Schedule was previously filed
on September 9, 1998 in Registrant's Initial Registration
Statement No. 333-63087/811-8116, and is incorporated by
reference herein. Sales Agreements (Select) with
Commission Schedule were previously filed on April 24,
1998 in Post-Effective Amendment No. 12 of Registration
Statement No. 33-71058/811-8116, and are incorporated by
reference herein.

(c) General Agent's Agreement was previously filed on April
24, 1998 in Post-Effective Amendment No. 12 of
Registration Statement No. 33-71058/811-8116, and is
incorporated by reference herein.

(d) Career Agent Agreement was previously filed on April 24,
1998 in Post-Effective Amendment No. 12 of Registration
Statement No. 33-71058/811-8116, and is incorporated by
reference herein.

(e) Registered Representative's Agreement was previously filed
on April 24, 1998 in Post-Effective Amendment No. 12 of
Registration Statement No. 33-71058/811-8116, and is
incorporated by reference herein.

EXHIBIT 4 Draft Contract Form 3027-98 was previously filed on
December 8, 1998 in Pre- Effective Amendment No. 1 of
Registration Statement No. 333-63087/811-8116, and is
incorporated by reference herein.

EXHIBIT 5 Application Form AS-495 was previously filed on December 8,
1998 in Pre-

<PAGE>

Effective Amendment No. 1 of Registration Statement No.
333-63087/811-8116, and is incorporated by reference herein.

EXHIBIT 6 Articles of Incorporation were previously filed on April 30,
1996 in Post-Effective Amendment No. 4 of Registration
Statement No. 33-71058/811-8116, and are incorporated by
reference herein. Revised Bylaws were previously filed on
April 30, 1996 in Post-Effective Amendment No. 4 of
Registration Statement No. 33-71058/811-8116, and are
incorporated by reference herein.

EXHIBIT 7 Not Applicable.

EXHIBIT 8 (a) Fidelity Service Agreement was previously filed on
April 30, 1996 in Post-Effective Amendment No. 4 of
Registration Statement No. 33-71058/811-8116, and is
incorporated by reference herein.

(b) An Amendment to the Fidelity Service Agreement, effective
as of January 1, 1997, was previously filed on April 30,
1997 in Post-Effective Amendment No. 7 of Registration
Statement No. 33-71058/811-8116, and is incorporated by
reference herein.

(c) Fidelity Service Contract, effective as of January 1,
1997, was previously filed on April 30, 1997 in
Post-Effective Amendment No. 7 of Registration Statement
No. 33-71058/811-8116, and is incorporated by reference
herein.

(d) T. Rowe Price Service Agreement was previously filed on
April 24,1998 in Post-Effective Amendment No. 12 of
Registration Statement No. 33-71058/811-8116, and is
incorporated by reference herein.

(e) BFDS Agreements for lockbox and mailroom services were
previously filed on April 24, 1998 in Post-Effective
Amendment No. 12 of Registration Statement No.
33-71058/811-8116, and are incorporated by reference
herein.

(f) Directors' Power of Attorney is filed herewith.

EXHIBIT 9 Opinion of Counsel is filed herewith.

EXHIBIT 10 Consent of Independent Accountants is filed herewith.

EXHIBIT 11 None.

EXHIBIT 12 None.

EXHIBIT 13 Schedule for Computation of Performance Calculations is filed
herewith.

EXHIBIT 14 Not Applicable

EXHIBIT 15 (a) Participation Agreement between the Company and Allmerica
Investment Trust dated March 22, 2000 was previously filed
in April 2000 in Post-Effective Amendment No. 11 of
Registration Statement No. 33-71052/811-8114, and is
incorporated by reference herein.

(b) Amendment dated March 29, 2000 and Amendment dated
November 13, 1998 were previously filed in April 2000 in
Post-Effective Amendment No. 11 of Registration Statement
No. 33-71052/811-8114, and are incorporated by reference
herein. Participation Agreement between the Company and
Fidelity VIP, as amended, was previously filed on
April 24, 1998 in Post-Effective Amendment No. 12 of
Registration Statement No. 33-71058/811-8116, and is
incorporated by reference herein.

<PAGE>

(c) Participation Agreement between the Company and T. Rowe
Price International Series, Inc. was previously filed on
April 24, 1998 in Post-Effective Amendment No. 12 of
Registration Statement No. 33-71058/811-8116, and is
incorporated by reference herein.

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

The principal business address of all the following Directors and
Officers is:
440 Lincoln Street
Worcester, Massachusetts 01653

DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME AND POSITION WITH COMPANY PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- ------------------------------ ----------------------------------------------
<S> <C>
Bruce C. Anderson Director (since 1996), Vice President (since 1984) and Assistant
Director and Vice President Secretary (since 1992) of First Allmerica

Warren E. Barnes Vice President (since 1996) and Corporate Controller (since 1998)
Vice President and of First Allmerica
Corporate Controller

Mark R. Colborn Director (since 2000) and Vice President (since 1992) of First
Director and Vice President Allmerica

Mary Eldridge Secretary (since 1999) of Allmerica Financial; Secretary (since
Secretary 1999) of Allmerica Investments, Inc.; and Secretary (since 1999) of
Allmerica Financial Investment Management Services, Inc.

J. Kendall Huber Director, Vice President and General Counsel of First Allmerica
Director, Vice President and (since 2000); Vice President (1999) of Promos Hotel Corporation;
General Counsel Vice President & Deputy General Counsel (1998-1999) of Legg
Mason, Inc.; Vice President and Deputy General Counsel (1995-
1998) of USF&G Corporation

John P. Kavanaugh Director and Chief Investment Officer (since 1996) and Vice
Director, Vice President and President (since 1991) of First Allmerica; Vice President (since
Chief Investment Officer 1998) of Allmerica Financial Investment Management Services,
Inc.; and President (since 1995) and Director (since 1996) of
Allmerica Asset Management, Inc.

J. Barry May Director (since 1996) of First Allmerica; Director and President
Director (since 1996) of The Hanover Insurance Company; and Vice
President (1993 to 1996) of The Hanover Insurance Company

James R. McAuliffe Director (since 1996) of First Allmerica; Director (since 1992),
Director President (since 1994) and Chief Executive Officer (since 1996) of
Citizens Insurance Company of America

Mark C. McGivney Vice President (since 1997) and Treasurer (since 2000) of First
Vice President and Treasurer Allmerica; Associate, Investment Banking (1996 -1997) of
Merrill Lynch & Co.; Associate, Investment Banking (1995) of
Salomon Brothers, Inc.; Treasurer (since 2000) of Allmerica

<PAGE>

Investments, Inc., Allmerica Asset Management, Inc. and
Allmerica Financial Investment Management Services, Inc.

John F. O'Brien Director, President and Chief Executive Officer (since 1989) of First
Director, President and Chief Allmerica
Executive Officer

Edward J. Parry, III Director and Chief Financial Officer (since 1996), Vice President
Director, Vice President, (since 1993), and Treasurer (1993 - 2000) of First Allmerica
Chief Financial Officer

Richard M. Reilly Director (since 1996) and Vice President (since 1990) of First
Director and Vice President Allmerica; President (since 1995) of Allmerica Financial Life
Insurance and Annuity Company; Director (since 1990) of
Allmerica Investments, Inc.; and Director and President (since
1998) of Allmerica Financial Investment Management Services,
Inc.

Robert P. Restrepo, Jr. Director and Vice President (since 1998) of First Allmerica;
Director and Vice President Director (since 1998) of The Hanover Insurance Company; Chief
Executive Officer (1996 to 1998) of Travelers Property & Casualty;
Senior Vice President (1993 to 1996) of Aetna Life & Casualty
Company

Eric A. Simonsen Director (since 1996) and Vice President (since 1990) of First
Director and Vice President Allmerica; Director (since 1991) of Allmerica Investments, Inc.; and
Director (since 1991) of Allmerica Financial Investment
Management Services, Inc.
</TABLE>
<PAGE>

ITEM 26. PERSONS UNDER COMMON CONTROL WITH REGISTRANT

<TABLE>
<S><C>
Allmerica Financial Corporation

Delaware

| | | | | | | |
________________________________________________________________________________________________________________________________
100% 100% 100% 100% 100% 100% 100% 100%
Allmerica Financial Allmerica, Allmerica First Allmerica AFC Capital Allmerica First Sterling
Asset Profiles, Inc. Inc. Funding Financial Life Trust I Services Limited
Management, Inc. Corp. Insurance Corporation
Company

Massachusetts California Massachusetts Massachusetts Massachusetts Delaware Massachusetts Bermuda
| | |
| ___________________________________________________________ ________________
| | | | |
| 100% 99.2% 100% 100%
| Advantage Allmerica Allmerica First Sterling
| Insurance Trust Financial Life Reinsurance
| Network, Inc. Company, N.A. Insurance and Company
| Annuity Company Limited
|
| Delaware Federally Chartered Delaware Bermuda
| |
|_________________________________________________________________________________________________________________________
| | | | | | | | | |
| 100% 100% 100% 100% 100% 100% 100% 100% 100%
| Allmerica Allmerica Allmerica Allmerica Allmerica Allmerica Allmerica Allmerica Allmerica
| Investments, Investment Financial Financial Investments Investments Investments Investments Investments
| Inc. Management Investment Services Insurance Insurance Insurance Insurance Insurance
| Company, Inc. Management Insurance Agency Inc. Agency of Agency Inc. Agency Inc. Agency Inc.
| Services, Inc. Agency, Inc. of Alabama Florida Inc. of Georgia of Kentucky of Mississippi
|
|Massachusetts Massachusetts Massachusetts Massachusetts Alabama Florida Georgia Kentucky Mississippi
|
________________________________________________________________
| | | |
100% 100% 100% 100%
Allmerica Sterling Risk Allmerica Allmerica
Property Management Benefits, Inc. Asset
& Casualty Services, Inc. Management,
Companies, Inc. Limited

Delaware Delaware Florida Bermuda
|
________________________________________________
| | |
100% 100% 100%
The Hanover Allmerica Citizens
Insurance Financial Insurance
Company Insurance Company
Brokers, Inc. of Illinois

New Hampshire Massachusetts Illinois
|
________________________________________________________________________________________________________________________________
| | | | | | | |
100% 100% 100% 100% 100% 100% 100% 100%
Allmerica Allmerica The Hanover Hanover Texas Citizens Massachusetts Allmerica AMGRO
Financial Plus American Insurance Corporation Bay Insurance Financial Inc.
Benefit Insurance Insurance Management Company Alliance
Insurance Agency, Inc. Company Company, Inc. Insurance
Company Company

Pennsylvania Massachusetts New Hampshire Texas Delaware New Hampshire New Hampshire Massachusetts
| |
________________________________________________ ________________
| | | |
100% 100% 100% 100%
Citizens Citizens Citizens Lloyds Credit
Insurance Insurance Insurance Corporation
Company Company Company
of Ohio of America of the
Midwest

Ohio Michigan Indiana Massachusetts
|
_________________
|
100%
Citizens
Management
Inc.

Michigan

- ----------------- ----------------- -----------------
Allmerica Greendale AAM
Equity Special Equity Fund
Index Pool Placements
Fund

Massachusetts Massachusetts Massachusetts

- -------- Grantor Trusts established for the benefit of First Allmerica,
Allmerica Financial Life, Hanover and Citizens

--------------- ----------------
Allmerica Allmerica
Investment Trust Securities
Trust

Massachusetts Massachusetts

- -------- Affiliated Management Investment Companies

...............
Hanover Lloyd's
Insurance
Company

Texas

- -------- Affiliated Lloyd's plan company, controlled by Underwriters
for the benefit of The Hanover Insurance Company

----------------- -----------------
AAM Growth AAM High Yield
& Income Fund, L.L.C.
Fund L.P.

Delaware Massachusetts

________ L.P. or L.L.C. established for the benefit of First Allmerica,
Allmerica Financial Life, Hanover and Citizens
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY
<S> <C> <C>
AAM Equity Fund 440 Lincoln Street Massachusetts Grantor Trust
Worcester MA 01653

AAM Growth & Income Fund, L.P 440 Lincoln Street Limited Partnership
Worcester MA 01653

Advantage Insurance Network Inc. 440 Lincoln Street Insurance Agency
Worcester MA 01653

AFC Capital Trust I 440 Lincoln Street Statutory Business Trust
Worcester MA 01653

Allmerica Asset Management Limited 440 Lincoln Street Investment advisory services
Worcester MA 01653

Allmerica Asset Management, Inc. 440 Lincoln Street Investment advisory services
Worcester MA 01653

Allmerica Benefits, Inc. 440 Lincoln Street Non-insurance medical services

<PAGE>

Worcester MA 01653

Allmerica Equity Index Pool 440 Lincoln Street Massachusetts Grantor Trust
Worcester MA 01653

Allmerica Financial Alliance Insurance 100 North Parkway Multi-line property and casualty
Company Worcester MA 01605 insurance

Allmerica Financial Benefit Insurance 100 North Parkway Multi-line property and casualty
Company Worcester MA 01605 insurance

Allmerica Financial Corporation 440 Lincoln Street Holding Company
Worcester MA 01653

Allmerica Financial Insurance 440 Lincoln Street Insurance Broker
Brokers, Inc. Worcester MA 01653

Allmerica Financial Life Insurance 440 Lincoln Street Life insurance, accident and health
and Annuity Company (formerly known Worcester MA 01653 insurance, annuities, variable
as SMA Life Assurance Company annuities and variable life insurance

Allmerica Financial Services Insurance 440 Lincoln Street Insurance Agency
Agency, Inc. Worcester MA 01653

Allmerica Funding Corp. 440 Lincoln Street Special purpose funding vehicle for
Worcester MA 01653 commercial paper

Allmerica, Inc. 440 Lincoln Street Common employer for Allmerica
Worcester MA 01653 Financial Corporation entities

Allmerica Financial Investment 440 Lincoln Street Investment advisory services
Management Services, Inc. (formerly Worcester MA 01653
known as Allmerica Institutional Services,
Inc. and 440 Financial Group of
Worcester, Inc.)

Allmerica Investment Management 440 Lincoln Street Investment advisory services
Company, Inc. Worcester MA 01653

Allmerica Investments, Inc. 440 Lincoln Street Securities, retail broker-dealer
Worcester MA 01653

Allmerica Investments Insurance Agency 200 Southbridge Parkway Insurance Agency
Inc. of Alabama Suite 400
Birmingham, AL 35209

Allmerica Investments Insurance Agency 14211 Commerce Way Insurance Agency
of Florida, Inc. Miami Lakes, FL 33016

Allmerica Investment Insurance Agency 1455 Lincoln Parkway Insurance Agency
Inc. of Georgia Suite 300
Atlanta, GA 30346

<PAGE>

Allmerica Investment Insurance Agency Barkley Bldg-Suite 105 Insurance Agency
Inc. of Kentucky 12700 Shelbyville Road
Louisiana, KY 40423

Allmerica Investments Insurance Agency 631 Lakeland East Drive Insurance Agency
Inc. of Mississippi Flowood, MS 39208

Allmerica Investment Trust 440 Lincoln Street Investment Company
Worcester MA 01653

Allmerica Plus Insurance 440 Lincoln Street Insurance Agency
Agency, Inc. Worcester MA 01653

Allmerica Property & Casualty 440 Lincoln Street Holding Company
Companies, Inc. Worcester MA 01653

Allmerica Securities Trust 440 Lincoln Street Investment Company
Worcester MA 01653

Allmerica Services Corporation 440 Lincoln Street Internal administrative services
Worcester MA 01653 provider to Allmerica Financial
Corporation entities

Allmerica Trust Company, N.A. 440 Lincoln Street Limited purpose national trust
Worcester MA 01653 company

AMGRO, Inc. 100 North Parkway Premium financing
Worcester MA 01605

Citizens Corporation 440 Lincoln Street Holding Company
Worcester MA 01653

Citizens Insurance Company of America 645 West Grand River Multi-line property and casualty
Howell MI 48843 insurance

Citizens Insurance Company of Illinois 333 Pierce Road Multi-line property and casualty
Itasca IL 60143 insurance

Citizens Insurance Company of the 3950 Priority Way Multi-line property and casualty
Midwest South Drive, Suite 200 insurance
Indianapolis IN 46280

Citizens Insurance Company of Ohio 8101 N. High Street Multi-line property and casualty
P.O. Box 342250 insurance
Columbus OH 43234

Citizens Management, Inc. 645 West Grand River Services management company
Howell MI 48843

Financial Profiles 5421 Avenida Encinas Computer software company
Carlsbad, CA 92008

First Allmerica Financial Life Insurance 440 Lincoln Street Life, pension, annuity, accident

<PAGE>

Company (formerly State Mutual Life Worcester MA 01653 and health insurance company
Assurance Company of America)

First Sterling Limited 440 Lincoln Street Holding Company
Worcester MA 01653

First Sterling Reinsurance Company 440 Lincoln Street Reinsurance Company
Limited Worcester MA 01653

Greendale Special Placements Fund 440 Lincoln Street Massachusetts Grantor Trust
Worcester MA 01653

The Hanover American Insurance 100 North Parkway Multi-line property and casualty
Company Worcester MA 01605 insurance

The Hanover Insurance Company 100 North Parkway Multi-line property and casualty
Worcester MA 01605 insurance

Hanover Texas Insurance Management 801 East Campbell Road Attorney-in-fact for Hanover Lloyd's
Company, Inc. Richardson TX 75081 Insurance Company

Hanover Lloyd's Insurance Company Hanover Lloyd's Insurance Multi-line property and casualty
Company insurance

Lloyds Credit Corporation 440 Lincoln Street Premium financing service
Worcester MA 01653 franchises

Massachusetts Bay Insurance Company 100 North Parkway Multi-line property and casualty
Worcester MA 01605 insurance

Sterling Risk Management Services, Inc. 440 Lincoln Street Risk management services
Worcester MA 01653
</TABLE>

ITEM 27. NUMBER OF CONTRACT OWNERS

As of February 29, 2000, there were 1,188 Contract holders of qualified
Contracts and 1,915 Contract holders of non-qualified Contracts.

ITEM 28. INDEMNIFICATION

To the fullest extent permissible under Massachusetts General Laws, no
director shall be personally liable to the Company or any policyholder
for monetary damages for any breach of fiduciary duty as a director,
notwithstanding any provision of law to the contrary; provided,
however, that this provision shall not eliminate or limit the liability
of a director.

1. for any breach of the director's duty of loyalty to the Company or
its policyholders;

2. for acts or omissions not in good faith, or which involve
intentional misconduct or a knowing violation of law;

3. for liability, if any, imposed on directors of insurance companies
pursuant to M.G.L.A. c. 156B Section 61 or M.G.L.A. c. 156B
Section 62;

<PAGE>

4. for any transactions from which the director derived an improper
personal benefit.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) Allmerica Investments, Inc. also acts as principal underwriter for the
following:

- VEL Account, VEL II Account, VEL Account III, Separate Account
SPL-D, Separate Account IMO, Select Account III, Inheiritage
Account, Separate Accounts VA-A, VA-B, VA-C, VA-G, VA-H, VA-K, VA-P,
Allmerica Select Separate Account II, Group VEL Account, Separate
Account KG, Separate Account KGC, Fulcrum Separate Account, Fulcrum
Variable Life Separate Account, and Allmerica Select Separate
Account of Allmerica Financial Life Insurance and Annuity Company

- Inheiritage Account, VEL II Account, Separate Account I, Separate
Account VA-K, Separate Account VA-P, Allmerica Select Separate
Account II, Group VEL Account, Separate Account KG, Separate Account
KGC, Fulcrum Separate Account, and Allmerica Select Separate Account
of First Allmerica Financial Life Insurance Company.

- Allmerica Investment Trust

(b) The Principal Business Address of each of the following Directors and
Officers of Allmerica Investments, Inc. is:
440 Lincoln Street
Worcester, Massachusetts 01653

NAME POSITION OR OFFICE WITH UNDERWRITER
---- -----------------------------------

Margaret L. Abbott Vice President

Emil J. Aberizk, Jr Vice President

Edward T. Berger Vice President and Chief Compliance Officer

Michael J. Brodeur Vice President Operations

Mary M. Eldridge Secretary/Clerk

Mark R. Colborn Vice President

Claudia J. Eckels Vice President

Philip L. Heffernan Vice President

J. Kendall Huber Director

Mark C. McGivney Treasurer

William F. Monroe, Jr. President, Director and Chief Executive Officer

David J. Mueller Vice President, Chief Financial Officer,
Financial Operations Principal and Controller

Stephen Parker Vice President and Director

Richard M. Reilly Director and Chairman of the Board

Eric A. Simonsen Director

Mark G. Steinberg Senior Vice President

<PAGE>

(c) As indicated in Part B (Statement of Additional Information) in response to
Item 20(c), the aggregate amount of commissions retained by Allmerica
Investments, Inc., the principal underwriter of the Contracts, for sales of
variable contracts funded by the Registrant was $2,589,970 in 1999. No
other commissions or other compensation was received by the principal
underwriter, directly or indirectly, from the Registrant during the
Registrant's last fiscal year.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

Each account, book or other document required to be maintained by
Section 31(a) of the 1940 Act and Rules 31a-1 to 31a-3 thereunder are
maintained by the Company at 440 Lincoln Street, Worcester, Massachusetts.

ITEM 31. MANAGEMENT SERVICES

Effective March 31, 1995, the Company provides daily unit value calculations
and related services for the Company's separate accounts.

ITEM 32. UNDERTAKINGS

(a) The Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure that
the audited financial statements in the registration statement are never
more than 16 months old for so long as payments under the variable
annuity contracts may be accepted.

(b) The Registrant hereby undertakes to include in the prospectus a postcard
that the applicant can remove to send for a Statement of Additional
Information.

(c) The Registrant hereby undertakes to deliver a Statement of Additional
Information and any financial statements promptly upon written or oral
request, according to the requirements of Form N-4.

(d) Insofar as indemnification for liability arising under the 1933 Act may
be permitted to Directors, Officers and Controlling Persons of
Registrant under any registration statement, underwriting agreement or
otherwise, Registrant has been advised that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the 1933
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a Director, Officer or
Controlling Person of Registrant in the successful defense of any
action, suit or proceeding) is asserted by such Director, Officer or
Controlling Person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.

(e) The Company and the Registrant hereby represent that the aggregate fees
and charges under the Contracts are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks
assumed by the Company.

ITEM 33. REPRESENTATIONS CONCERNING WITHDRAWAL RESTRICTIONS ON SECTION 403(B)
PLANS AND UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM

Registrant, a separate account of First Allmerica Financial Life Insurance
Company ("First Allmerica"), states that it is (a) relying on Rule 6c-7
under the 1940 Act with respect to withdrawal restrictions under the Texas
Optional Retirement Program ("Program") and (b) relying on the "no-action"
letter (Ref. No. IP-6-88) issued on November 28, 1988 to the American
Council of Life Insurance, in applying the withdrawal restrictions of
Internal Revenue Code Section 403(b)(11). Registrant has taken the following
steps in reliance on the letter:

<PAGE>

1. Appropriate disclosures regarding the redemption restrictions imposed by
the Program and by Section 403(b)(11) have been included in the
prospectus of each registration statement used in connection with the
offer of the Company's variable contracts.

2. Appropriate disclosures regarding the redemption restrictions imposed by
the Program and by Section 403(b)(11) have been included in sales
literature used in connection with the offer of the Company's variable
contracts.

3. Sales Representatives who solicit participants to purchase the variable
contracts have been instructed to specifically bring the
redemption/withdrawal restrictions imposed by the Program and by Section
403(b)(11) to the attention of potential participants.

4. A signed statement acknowledging the participant's understanding of (i)
the restrictions on redemption imposed by the Program and by Section
403(b)(11) and (ii) the investment alternatives available under the
employer's arrangement will be obtained from each participant who
purchases a variable annuity contract prior to or at the time of
purchase.

Registrant hereby represents that it will not act to deny or limit a
transfer request except to the extent that a Service-Ruling or written
opinion of counsel, specifically addressing the fact pattern involved and
taking into account the terms of the applicable employer plan, determines
that denial or limitation is necessary for the variable annuity contracts to
meet the requirements of the Program or of Section 403(b). Any transfer
request not so denied or limited will be effected as expeditiously as
possible.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to the Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized, in the
City of Worcester, and Commonwealth of Massachusetts, on the 3rd day of April,
2000.

ALLMERICA SELECT SEPARATE ACCOUNT OF
FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

By: /s/ Mary Eldridge
---------------------------------
Mary Eldridge, Secretary

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Warren E. Barnes Vice President and Corporate Controller April 3, 2000
--------------------------
Warren E. Barnes

Edward J. Parry III* Director, Vice President and Chief Financial
-------------------------- Officer

Richard M. Reilly* Director and Vice President
--------------------------

John F. O'Brien* Director, President and Chief Executive Officer
--------------------------

Bruce C. Anderson* Director and Vice President
--------------------------

Mark R. Colborn* Director and Vice President
--------------------------

John P. Kavanaugh* Director, Vice President and
-------------------------- Chief Investment Officer

John F. Kelly* Director, Vice President and General Counsel
--------------------------

J. Barry May* Director
--------------------------

James R. McAuliffe* Director
--------------------------

Robert P. Restrepo, Jr.* Director and Vice President
--------------------------

Eric A. Simonsen* Director and Vice President
--------------------------
</TABLE>

* Sheila B. St. Hilaire, by signing her name hereto, does hereby sign this
document on behalf of each of the above-named Directors and Officers of the
Registrant pursuant to the Power of Attorney dated April 2, 2000 duly
executed by such persons.

/s/ Sheila B. St. Hilaire
- ---------------------------------------
Sheila B. St. Hilaire, Attorney-in-Fact
(333-63087)

<PAGE>

EXHIBIT TABLE

Exhibit 8(f) Directors' Power of Attorney

Exhibit 9 Opinion of Counsel

Exhibit 10 Consent of Independent Accountants

Exhibit 13 Schedule for Computation of Performance Quotations

<PAGE>

POWER OF ATTORNEY

We, the undersigned, hereby severally constitute and appoint Richard M. Reilly,
J. Kendall Huber, Joseph W. MacDougall, Jr., and Sheila B. St. Hilaire, and each
of them singly, our true and lawful attorneys, with full power to them and each
of them, to sign for us, and in our names and in any and all capacities, any and
all Registration Statements and all amendments thereto, including post-effective
amendments, with respect to the Separate Accounts supporting variable life and
variable annuity contracts issued by First Allmerica Financial Life Insurance
Company, and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, and with any
other regulatory agency or state authority that may so require, granting unto
said attorneys and each of them, acting alone, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
the premises, as fully to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys or any of
them may lawfully do or cause to be done by virtue hereof. Witness our hands on
the date set forth below.

SIGNATURE TITLE DATE
- --------- ----- ----

<S> <C> <C>
/s/ John F. O'Brien Director, President and Chief Executive 4/2/2000
- ------------------------------------- Officer --------
John F. O'Brien

/s/ Bruce C. Anderson Director and Vice President 4/2/2000
- ------------------------------------- --------
Bruce C. Anderson

/s/ Mark R. Colborn Director and Vice President 4/2/2000
- ------------------------------------- --------
Mark R. Colborn

/s/ John P. Kavanaugh Director, Vice President and 4/2/2000
- ------------------------------------- Chief Investment Officer --------
John P. Kavanaugh

/s/ J. Kendall Huber Director, Vice President and 4/2/2000
- ------------------------------------- General Counsel --------
J. Kendall Huber

/s/ J. Barry May Director 4/2/2000
- ------------------------------------- --------
J. Barry May

/s/ James R. McAuliffe Director 4/2/2000
- ------------------------------------- --------
James R. McAuliffe

/s/ Edward J. Parry, III Director, Vice President, and Chief Financial 4/2/2000
- ------------------------------------- Officer --------
Edward J. Parry, III

/s/ Richard M. Reilly Director and Vice President 4/2/2000
- ------------------------------------- --------
Richard M. Reilly

/s/ Robert P. Restrepo, Jr. Director and Vice President 4/2/2000
- ------------------------------------- --------
Robert P. Restrepo, Jr.

/s/ Eric A. Simonsen Director and Vice President 4/2/2000
- ------------------------------------- --------
Eric A. Simonsen
</TABLE>

<PAGE>

April 14, 2000

First Allmerica Financial Life Insurance Company
440 Lincoln Street
Worcester MA 01653

RE: ALLMERICA SELECT SEPARATE ACCOUNT OF FIRST ALLMERICA
FINANCIAL LIFE INSURANCE COMPANY
FILE NO.'S: 333-63087 AND 811-8116

Gentlemen:

In my capacity as Assistant Vice President and Counsel of First Allmerica
Financial Life Insurance Company (the "Company"), I have participated in the
preparation of this Post-Effective Amendment to the Registration Statement for
Allmerica Select Separate Account on Form N-4 under the Securities Act of 1933
and amendment under the Investment Company Act of 1940, with respect to the
Company's qualified and non-qualified variable annuity contracts.

I am of the following opinion:

1. Allmerica Select Separate Account is a separate account of the Company
validly existing pursuant to the Massachusetts Insurance Code and the
regulations issued thereunder.

2. The assets held in Allmerica Select Separate Account are not chargeable
with liabilities arising out of any other business the Company may
conduct.

3. The variable annuity contracts, when issued in accordance with the
Prospectus contained in the Post-Effective Amendment to the Registration
Statement and upon compliance with applicable local law, will be legal
and binding obligations of the Company in accordance with their terms and
when sold will be legally issued, fully paid and non-assessable.

In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.

I hereby consent to the filing of this opinion as an exhibit to the
Post-Effective Amendment to the Registration Statement for Allmerica Select
Separate Account on Form N-4 filed under the Securities Act of 1933 and
amendment under the Investment Company Act of 1940.

Very truly yours,

/s/ John C. Donlon, Jr.

John C. Donlon, Jr.
Assistant Vice President and Counsel

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 2 to the Registration
Statement of Allmerica Select Separate Account of First Allmerica Financial Life
Insurance Company on Form N-4 of our report dated February 1, 2000, relating to
the financial statements of First Allmerica Financial Life Insurance Company,
and our report dated April 3, 2000, relating to the financial statements of
Allmerica Select Separate Account of First Allmerica Financial Life Insurance
Company, both of which appear in such Statement of Additional Information. We
also consent to the reference to us under the heading "Experts" in such
Statement of Additional Information.

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP
Boston, Massachusetts
April 24, 2000

<PAGE>

<TABLE>
<CAPTION>
SELECT CHARTER - FAFLIC Since Inception of Underlying Sub-Account
1 Year With Contract
<S> <C> <C>
Select Capital Appreciation Fund 2.321048/1.877692-0.0021-1 = 23.40%
Select Aggressive Growth Fund 2.662873/1.947677-0.0021-1 = 36.51%
Select Growth Fund 3.451318/2.696579-0.0022-1 = 27.77%
Select Growth and Income Fund 2.565246/2.196796-0.0021-1 = 16.56%
Select Income Fund 1.294986/1.324655-0.0021-1 = -2.45%
Money Market Fund 1.241894/1.197423-0.0021-1 = 3.50%
Select International Equity Fund 2.088476/1.608108-0.0021-1 = 29.66%
T. Rowe Price International Stock Portfolio 1.836949/1.397385-0.0022-1 = 31.24%
Fidelity VIP High Income Portfolio 1.439204/1.34957-0.0021-1 = 6.43%
Fidelity VIP Equity-Income Portfolio 1.957009/1.866616-0.0021-1 = 4.63%
Fidelity VIP Growth Portfolio 3.170877/2.339876-0.0021-1 = 35.30%
Select Value Opportunity Fund 0.929152/0.988804-0.0022-1 = -6.25%
Select Emerging Markets Fund 1.268098/0.776022-0.0021-1 = 63.20%
Select Strategic Growth Fund 1.102832/0.963682-0.0021-1 = 14.23%
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Since Inception of Underlying Sub-Account
5 Years With Contract
<S> <C> <C>
Select Capital Appreciation Fund N/A
Select Aggressive Growth Fund (2.662873/1.000421)^0.2-0.0015-1 = 21.48%
Select Growth Fund (3.451318/1.032821)^0.2-0.0015-1 = 27.14%
Select Growth and Income Fund (2.565246/1.03027)^0.2-0.0015-1 = 19.87%
Select Income Fund (1.294986/0.99384)^0.2-0.0019-1 = 5.25%
Money Market Fund (1.241894/1.020525)^0.2-0.0019-1 = 3.81%
Select International Equity Fund (2.088476/0.956129)^0.2-0.0025-1 = 16.66%
T. Rowe Price International Stock Portfolio N/A
Fidelity VIP High Income Portfolio N/A
Fidelity VIP Equity-Income Portfolio N/A
Fidelity VIP Growth Portfolio N/A
Select Value Opportunity Fund N/A
Select Emerging Markets Fund N/A
Select Strategic Growth Fund N/A
</TABLE>

<TABLE>
<CAPTION>
Since Inception of Underlying Sub-Account
10 Years or Since Inception With Contract
<S> <C> <C>
Select Capital Appreciation Fund (2.321048/1)^(365/1707)-0.0016-1 = 19.57%
Select Aggressive Growth Fund (2.662873/1)^(365/2079)-0.0017-1 = 18.59%
Select Growth Fund (3.451318/1)^(365/2079)-0.0015-1 = 24.14%
Select Growth and Income Fund (2.565246/1)^(365/2080)-0.0016-1 = 17.82%
Select Income Fund (1.294986/1)^(365/2080)-0.002-1 = 4.44%
Money Market Fund (1.241894/1)^(365/2093)-0.0021-1 = 3.64%
Select International Equity Fund (2.088476/1)^(365/2067)-0.0027-1 = 13.62%
T. Rowe Price International Stock Portfolio (1.836949/1)^(365/1704)-0.0019-1 = 13.72%
Fidelity VIP High Income Portfolio (1.439204/1)^(365/1704)-0.0018-1 = 7.93%
Fidelity VIP Equity-Income Portfolio (1.957009/1)^(365/1704)-0.0016-1 = 15.31%
Fidelity VIP Growth Portfolio (3.170877/1)^(365/1704)-0.0015-1 = 27.89%
Select Value Opportunity Fund (0.929152/1)^(365/678)-0.0023-1 = -4.11%
Select Emerging Markets Fund (1.268098/1)^(365/679)-0.0027-1 = 13.35%
Select Strategic Growth Fund (1.102832/1)^(365/679)-0.0024-1 = 5.16%
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
SELECT CHARTER - FAFLIC Since Inception of Underlying Sub-Account
1 Year Without Contract
<S> <C> <C>
Select Capital Appreciation Fund 2.320902/1.877576-1 = 23.61%
Select Aggressive Growth Fund 2.662873/1.947677-1 = 36.72%
Select Growth Fund 3.451318/2.696579-1 = 27.99%
Select Growth and Income Fund 2.565246/2.196796-1 = 16.77%
Select Income Fund 1.294986/1.324655-1 = -2.24%
Money Market Fund 1.241894/1.197423-1 = 3.71%
Select International Equity Fund 2.088476/1.608108-1 = 29.87%
T. Rowe Price International Stock Portfolio 1.836949/1.397385-1 = 31.46%
Fidelity VIP High Income Portfolio 1.439204/1.34957-1 = 6.64%
Fidelity VIP Equity-Income Portfolio 1.957009/1.866616-1 = 4.84%
Fidelity VIP Growth Portfolio 3.170877/2.339876-1 = 35.51%
Select Value Opportunity Fund 0.929152/0.988804-1 = -6.03%
Select Emerging Markets Fund 1.268098/0.776022-1 = 63.41%
Select Strategic Growth Fund 1.102832/0.963682-1 = 14.44%
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Since Inception of Underlying Sub-Account
5 Years Without Contract
<S> <C> <C>
Select Capital Appreciation Fund N/A
Select Aggressive Growth Fund (2.662873/1.000421)^0.2-1 = 21.63%
Select Growth Fund (3.451318/1.032821)^0.2-1 = 27.29%
Select Growth and Income Fund (2.565246/1.03027)^0.2-1 = 20.02%
Select Income Fund (1.294986/0.99384)^0.2-1 = 5.44%
Money Market Fund (1.241894/1.020525)^0.2-1 = 4.00%
Select International Equity Fund (2.088476/0.956129)^0.2-1 = 16.91%
T. Rowe Price International Stock Portfolio N/A
Fidelity VIP High Income Portfolio N/A
Fidelity VIP Equity-Income Portfolio N/A
Fidelity VIP Growth Portfolio N/A
Select Value Opportunity Fund N/A
Select Emerging Markets Fund N/A
Select Strategic Growth Fund N/A
</TABLE>

<TABLE>
<CAPTION>
Since Inception of Underlying Sub-Account
10 Years or Since Inception Without Contract
<S> <C> <C>
Select Capital Appreciation Fund (2.320902/1)^(365/1707)-1 = 19.73%
Select Aggressive Growth Fund (2.662873/1)^(365/2079)-1 = 18.76%
Select Growth Fund (3.451318/1)^(365/2079)-1 = 24.29%
Select Growth and Income Fund (2.565246/1)^(365/2080)-1 = 17.98%
Select Income Fund (1.294986/1)^(365/2080)-1 = 4.64%
Money Market Fund (1.241894/1)^(365/2093)-1 = 3.85%
Select International Equity Fund (2.088476/1)^(365/2067)-1 = 13.89%
T. Rowe Price International Stock Portfolio (1.836949/1)^(365/1704)-1 = 13.91%
Fidelity VIP High Income Portfolio (1.439204/1)^(365/1704)-1 = 8.11%
Fidelity VIP Equity-Income Portfolio (1.957009/1)^(365/1704)-1 = 15.47%
Fidelity VIP Growth Portfolio (3.170877/1)^(365/1704)-1 = 28.04%
Select Value Opportunity Fund (0.929152/1)^(365/678)-1 = -3.88%
Select Emerging Markets Fund (1.268098/1)^(365/679)-1 = 13.62%
Select Strategic Growth Fund (1.102832/1)^(365/679)-1 = 5.40%
</TABLE>