UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to
Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 4, 1998
ALLMERICA FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 1-13754 04-3263626
(State or other jurisdic- (Commission File Number) (I.R.S. Employer I.D.
tion of Incorporation) Number)
440 Lincoln Street, Worcester, Massachusetts 01653
(Address of Principal Executive Offices)
(Zip Code)
(508) 855-1000
(Registrant's Telephone Number including area code)
Page 1 of 6 pages
Exhibit Index on page 4
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Item 5. Other Events.
On December 4, 1998, Allmerica Financial Corporation announced that it has
reached a settlement agreement in a class action lawsuit in connection with
the sale of life insurance policies issued by the Company from 1978 to May 31,
1998. The settlement agreement is subject to a court determination that it is
fair and reasonable, and to court approval. The fairness hearing is expected
to be held during the spring of next year. A copy of the press release is
attached as Exhibit 99 and is incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
Exhibit 99
Press Release dated December 4, 1998, announcing Allmerica Financial
Corporation has reached a settlement agreement in a class action lawsuit in
connection with the sale of life insurance policies issued by the Company
from 1978 to May 31, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALLMERICA FINANCIAL
CORPORATION
By:/s/ Edward J. Parry III ,
Edward J. Parry III
Vice President, Chief
Financial Officer, and
Treasurer
Date: December 7, 1998
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Exhibit Index
Exhibit 99
Press Release dated December 4, 1998, announcing Allmerica Financial
Corporation has reached a settlement agreement in a class action lawsuit in
connection with the sale of life insurance policies issued by the Company
from 1978 to May 31, 1998
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EXHIBIT 99
ALLMERICA FINANCIAL CORPORATION
ANNOUNCES CLASS ACTION SETTLEMENT
WORCESTER, Mass., December 4, 1998 - Allmerica Financial Corporation (NYSE:
AFC) today announced that it has reached a settlement agreement in a class
action lawsuit filed against Allmerica and three subsidiary companies in
connection with the sale of life insurance policies issued by the company from
1978 to May 31, 1998. Approximately 450,000 policies are affected by the
settlement.
"Allmerica always has insisted on an adherence to the highest ethical
standards of business conduct," said Allmerica President and Chief Executive
Officer John F. O'Brien. "We vigorously deny the allegations in the complaint
that we engaged in inappropriate sales practices. However, settlement of this
action at this time serves the interests of our policyholders, shareholders
and the company. It will enable us to resolve this matter in a timely manner,
and to avoid the tremendous expense and distraction of protracted litigation."
The lawsuit is similar to many filed against other life insurers in recent
years. In general, the lawsuits have been prompted by policyholder
disappointment in their policies' performance, largely as a result of
declining interest rates. Many insurers have settled these lawsuits, or are
currently involved in settlement negotiations.
The settlement agreement is subject to a court determination that it is fair
and reasonable, and to court approval. The fairness hearing is expected to be
held during the Spring of next year.
Under the agreement, Allmerica will provide benefits and remedies designed to
address the specific circumstances of individual policyholders. The company
will extend to all class members the opportunity to purchase an annuity to
which Allmerica will make contributions, or the opportunity to purchase a
discounted life insurance product. Alternatively, relief may be available
through an alternative dispute resolution process through which policyholders
who believe they were misled when they purchased a policy can seek benefits.
As part of that process, independent claims adjudicators will determine what,
if any benefits will be made available. The agreement must be approved by the
court before Allmerica can make benefits available to policyholders.
Allmerica has established an extensive communications program to inform
individuals of the agreement, to review their rights and the benefits
available to them, and to respond to questions from class members. During the
next several weeks, the company plans to mail informational packages to all
class members and to open a toll-free call center to respond to policyholder
inquiries.
"Through our more than 150 years, Allmerica has been committed to serving the
interests of our policyholders responsibly," said O'Brien. "This settlement is
consistent with that commitment, and will allow us to conclude this litigation
while offering important benefits to our policyholders. We look forward to
focusing all of our energies and resources on helping our policyholders meet
their future financial security needs."
Allmerica Financial is a diversified group of insurance and financial services
companies headquartered in Worcester, Mass. The Allmerica companies rank among
the country's 20 leading providers of variable insurance products and the 30
largest providers of property and casualty coverage. The lead company in the
group, Allmerica Financial Corporation, is a Fortune 500 company.
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AF-41
12/4/98
Contacts: Investors: Media:
Jean Peters Mike Buckley
(508) 855-3599 (508) 855-3099
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