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): February 3, 2000
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
tion of Incorporation) I.D. 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 39 pages
Exhibit Index on page 4
Page 1
<PAGE>
Item 5. Other Events.
On February 3, 2000, Allmerica Financial Corporation announced its
financial results for fourth quarter 1999. A copy of the press release
and accompanying statistical supplement are attached as Exhibits 99 and 99.1
and are incorporated by reference herein.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE `SAFE HARBOR' PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Forward-Looking Statements
The Company wishes to caution readers that the following important factors,
among others, in some cases have affected and in the future could affect, the
Company's actual results and could cause the Company's actual results for 1999
and beyond to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, the Company. When used in the MD&A
discussion, the words "believes", "anticipates", "expects" and similar
expressions are intended to identify forward looking statements. See
"Important Factors Regarding Forward-Looking Statements" filed as
Exhibit 99-2 to the Company's June 30, 1999 Form 10-Q.
Factors that may cause actual results to differ materially from those
contemplated or projected, forecast, estimated or budgeted in such forward
looking statements include among others, the following possibilities: (i)
adverse catastrophe experience and severe weather; (ii) adverse loss
development for events the Company insured in prior years or adverse trends in
mortality and morbidity; (iii) heightened competition, including the
intensification of price competition, the entry of new competitors, and the
introduction of new products by new and existing competitors; (iv) adverse
state and federal legislation or regulation, including decreases in rates,
limitations on premium levels, increases in minimum capital and reserve
requirements, benefit mandates, limitations on the ability to manage care and
utilization, and tax treatment of insurance and annuity products; as well as
continued compliance with state and federal regulations; (v) changes
in interest rates causing a reduction of investment income or in the market
value of interest rate sensitive investments; (vi) failure to obtain new
customers, retain existing customers or reductions in policies in force by
existing customers; (vii) higher service, administrative, or general expense
due to the need for additional advertising, marketing, administrative or
management information systems expenditures; (viii) loss or retirement of key
executives; (ix) increases in medical costs, including increases in
utilization, costs of medical services, pharmaceuticals, durable medical
equipment and other covered items; (x) termination of provider contracts or
renegotiations at less cost-effective rates or terms of payment; (xi) changes
in the Company's liquidity due to changes in asset and liability matching;
(xii) restrictions on insurance underwriting, based on genetic testing and
other criteria; (xiii) adverse changes in the ratings obtained from
independent rating agencies, such as Moody's, Standard and Poor's, A.M. Best,
and Duff & Phelps; (xiv) lower appreciation on and decline in value of managed
investments, resulting in reduced variable products, assets and related fees;
(xv) possible claims relating to sales practices for insurance products; (xvi)
uncertainty related to the Year 2000 issue; (xvii) failure of a reinsurer of
the Company's policies to pay its liabilities under reinsurance contracts;
(xviii) earlier than expected withdrawals from the Company's general account
annuities, GICs (including funding agreements), and other insurance products;
(xix) changes in the mix of assets comprising the Company's investment
portfolio and the fluctuation of the market value of such assets; and (xx)
losses resulting from the Company's participation in certain reinsurance
pools.
Item 7. Financial Statements and Exhibits.
Exhibit 99 Press Release dated February 3, 2000, announcing Allmerica
Financial Corporation fourth quarter 1999 financial results.
Exhibit 99.1 Allmerica Financial Corporation Fourth Quarter Statistical
Supplement.
Page 2
<PAGE>
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: February 7, 2000
Page 3
<PAGE>
Exhibit Index
Exhibit 99 Press Release dated February 3, 2000, announcing Allmerica
Financial Corporation fourth quarter 1999 financial results.
Exhibit 99.1 Allmerica Financial Corporation Fourth Quarter Statistical
Supplement.
Page 4
<PAGE>
EXHIBIT 99
ALLMERICA FINANCIAL CORPORATION REPORTS
RECORD OPERATING EARNINGS OF $5.06 PER SHARE FOR 1999
WORCESTER, Mass., February 3, 2000 - Allmerica Financial Corporation
(NYSE: AFC) today reported record operating earnings from continuing
operations for the fourth quarter and full-year 1999.
Fourth quarter highlights:
Net operating income per share from continuing operations was $1.48, or
$80.8 million, an increase in earnings per share of 32.1 percent compared
to $1.12 per share, or $67.1 million in 1998. Net operating income from
continuing operations excludes net realized investment gains and losses
and other non-recurring gains and charges, net of taxes.
Return on equity increased substantially in 1999 to 12.3 percent versus
9.4 percent in 1998.
Asset Accumulation pre-tax operating earnings were $59.5 million, up
18.5 percent from $50.2 million for the same period in 1998.
Variable annuity sales were $653.0 million, an increase of 2.8 percent
over sales in the third quarter of 1999.
Risk Management pre-tax operating earnings were $65.0 million, up from
the $52.4 million reported in the fourth quarter of 1998.
Net income was $68.4 million, or $1.25 per share, compared to $65.9 million,
or $1.10 per share in 1998.
Full-year highlights:
Net operating income per share from continuing operations was $5.06, or
$280.9 million, an increase in earnings per share of 43.8 percent compared
to $3.52 per share or $212.5 million in 1998.
Net operating income per share from continuing operations has grown at a
29 percent cumulative average growth rate since going public in 1995.
Asset Accumulation pre-tax operating income was $229.0 million, an
18.8 percent increase from $192.7 million in 1998.
Risk Management pre-tax operating income for the year was $199.6 million,
up 33.4 percent from $149.6 million for the full year 1998.
1999 net income was $295.8 million, or $5.33 per share, up from
$201.2 million, or $3.33 per share in 1998.
"Our fifth consecutive year of record earnings and significant improvement
in our return on equity confirm the soundness of our operating strategies,"
said John F. O'Brien, president and chief executive officer of Allmerica
Financial Corporation. "1999's results extended our impressive record of
earnings growth which began with our initial public offering in 1995.
Since we became a public company, we have delivered average annual
operating earnings growth of 29 percent. We are confident our strategies
will continue to deliver value to our shareholders in 2000 and beyond."
<PAGE>
Segment Results
Allmerica Financial operates in two primary businesses: Asset Accumulation
and Risk Management. The Asset Accumulation business markets insurance and
retirement savings products and services to individual and institutional
clients through Allmerica Financial Services, and investment management
services to institutions, pension funds, and other organizations through
Allmerica Asset Management, Inc. Risk Management markets property and
casualty insurance products on a regional basis through The Hanover
Insurance Company and Citizens Insurance Company of America.
Asset Accumulation
Fourth quarter pre-tax operating earnings for the Asset Accumulation
business increased to $59.5 million from $50.2 million in 1998. Full-year
Asset Accumulation pre-tax operating earnings increased 18.8 percent, to
$229.0 million, compared to $192.7 million in 1998.
Allmerica Financial Services' pre-tax operating earnings increased to
$54.2 million in the quarter, up from $43.5 million in the fourth quarter
of 1998. Full-year pre-tax operating earnings were $205.5 million in 1999,
up 21.6 percent from $169.0 million in 1998.
Allmerica Asset Management's fourth quarter pre-tax operating earnings were
$5.3 million, down from $6.7 million in the same period in the prior year.
Full-year pre-tax operating earnings in 1999 were $23.5 million, compared to
$23.7 million in 1998.
Asset Accumulation highlights:
Variable annuity sales were $2.8 billion in 1999 versus $3.2 billion in
1998. Variable annuity sales in the fourth quarter of 1999 were $653.0
million, a 2.8% increase over sales in the third quarter of 1999.
Variable product assets increased to $17.6 billion at December 31, 1999
up 28.5 percent from $13.7 billion in 1998.
Variable product fees of $79.7 million were up 28.5 percent over the 1998
fourth quarter, and up 29.2 percent for the year to $291.2 million.
Increased fees are related to variable product asset growth resulting from
sales and stock market appreciation.
Variable life insurance sales were up 21.7 percent, to $52.2 million in
the quarter, and increased 17.8 percent, to $187.0 million for the
full-year 1999.
<PAGE>
Risk Management
Risk Management pre-tax operating earnings were $65.0 million, compared to
$52.4 million for the fourth quarter of 1998. Pre-tax catastrophe losses
were $3.8 million in the quarter, versus $7.9 million in 1998. Full-year
Risk Management pre-tax operating earnings were $199.6 million in 1999,
compared to $149.6 million in 1998. Pre-tax catastrophe losses were $76.9
million in 1999, compared to $90.3 million in 1998.
Risk Management highlights:
Direct written premiums increased 6.4 percent in the fourth quarter of 1999
to $519.8 million from $488.4 million in the fourth quarter of 1998. Full
year direct written premiums increased 10.0 percent in 1999 to $2.2 billion
compared to $2.0 billion in 1998.
The statutory expense ratio was 28.5 percent in the quarter, down from 28.9
percent in the same period in 1998. The full-year statutory expense ratio
was 28.5 percent in both 1999 and 1998.
Corporate
Corporate segment net expenses were $16.1 million in the fourth quarter of
1999, compared to $15.3 million in 1998. Full-year corporate net expenses
were $59.3 million and $50.9 million in 1999 and 1998, respectively.
Investment Results
Net investment income was $145.9 million for the fourth quarter of 1999,
compared to $157.0 million in the same period in 1998. This decrease is due
to lower average invested assets, primarily resulting from the timing of
share repurchases and other capital transactions during the period.
Full-year 1999 net investment income was $615.7 million, compared to
$604.4 million in 1998.
Fourth quarter net realized investment losses were $15.5 million, compared
to $10.1 million of net realized investment gains in 1998. Full-year 1999
net realized investment gains were $91.0 million, up from $59.2 million in
1998. During 1999, realized gains related principally to the sale of
appreciated equities in the property and casualty investment portfolio.
Balance Sheet
Shareholders' equity was $2.2 billion, or $41.32 per share at December 31,
1999, compared to $2.5 billion, or $41.95 per share at December 31, 1998.
Excluding the impact of SFAS No. 115, book value was $42.71 per share at the
close of the fourth quarter, compared to $38.87 per share at
December 31, 1998.
Total assets were $30.8 billion at December 31, 1999, up from $27.7 billion
at year-end 1998.
Interim information is unaudited.
Allmerica Financial Corporation is the holding company for a diversified
group of insurance and financial services companies headquartered in
Worcester, Massachusetts.
CONTACTS: Investors Media
Henry P. St. Cyr Michael F. Buckley
(508) 855-2959 (508) 855-3099
<PAGE>
ALLMERICA FINANCIAL CORPORATION
<TABLE>
<CAPTION>
(In millions, except per share data)
Quarter ended Year ended
December 31 December 31
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net income $68.4 $65.9 $295.8 $201.2
Net income per share $1.25 $1.10 $ 5.33 $ 3.33
Weighted average shares 54.6 59.9 55.5 60.3
</TABLE>
The following is a reconciliation from net operating income to net income
per share:
<TABLE>
<CAPTION>
PER SHARE DATA (DILUTED) <FN2>
Quarter ended Year ended
December 31 December 31
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net operating income<FN1> $1.48 $1.12 $5.06 $3.52
Net realized (losses)
gains on investments,
net of taxes, minority
interest and amortization (0.25) 0.11 1.13 0.48
Loss from operations of
discontinued business,
net of taxes 0.00 (0.03) (0.33) (0.23)
Loss on disposal of group
life and health business,
net of taxes 0.00 0.00 (0.55) 0.00
Sales practice litigation
expense, net of taxes 0.00 0.00 0.00 (0.33)
Restructuring charges,
net of taxes and minority
interest 0.02 (0.10) 0.02 (0.10)
Other non-operating items,
net of taxes 0.00 0.00 0.00 (0.01)
-------------- --------------
Net income $1.25 $1.10 $5.33 $3.33
-------------- --------------
<FN>
<FN1> Net operating income excludes net realized gains and losses and
other items which management believes are not indicative of overall
operating trends, all net of taxes and minority interest.
<FN2> Basic net income per share was $1.26 and $1.11 for the quarters
ended December 31, 1999 and 1998, respectively, and $5.38 and $3.36
for the years ended December 31, 1999 and 1998, respectively.
</FN>
</TABLE>
All figures reported are unaudited and are in accordance with generally
accepted accounting principles.
<PAGE>
Exhibit 99.1
ALLMERICA FINANCIAL CORPORATION
STATISTICAL SUPPLEMENT
TABLE OF CONTENTS
Financial Highlights 1 - 3
Consolidated Financial Statements
Income Statements 4
Balance Sheets 5
Shareholders' Equity 6
Segment Results
Income Statement Highlights 7
Historical Income Statement Highlights 8
Balance Sheet Highlights 9
Risk Management
Condensed Income Statements 10
Selected Financial Information by Distribution Channel 11 - 16
Property and Casualty
Selected Financial Information and Supplemental Data 17
Selected Statutory Financial Information 18
Asset Accumulation
Allmerica Financial Services
Condensed Income Statements 19
Operating Income by Product Line 20 - 21
Premiums, Deposits and Other Income 22
Future Policy Benefits and Account Balances 23
Allmerica Asset Management
Condensed Income Statements and Supplemental Information 24
Corporate
Condensed Income Statements 25
Investment Results
Net Investment Income, Including Closed Block 26
Historical Financial Highlights 27 - 29
Other Information
Corporate Information Inside back cover
Market and Dividend Information
Industry Ratings
<PAGE>
ALLMERICA FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
QUARTER ENDED DECEMBER 31, 1999
Fourth Quarter Highlights:
Net operating income per share from continuing operations was $1.48, or
$80.8 million, an increase in earnings per share of 32.1 percent compared
to $1.12 per share, or $67.1 million in 1998. Net operating income from
continuing operations excludes net realized investment gains and losses
and other non-recurring gains and charges, net of taxes.
Return on equity increased substantially in 1999 to 12.3 percent versus
9.4 percent in 1998.
Asset Accumulation pre-tax operating earnings were $59.5 million, up 18.5
percent from $50.2 million for the same period in 1998.
Variable annuity sales were $653.0 million, an increase of 2.8 percent
over sales in the third quarter of 1999.
Risk Management pre-tax operating earnings were $65.0 million, up from
the $52.4 million reported in the fourth quarter of 1998.
Net income was $68.4 million, or $1.25 per share, compared to $65.9
million, or $1.10 per share in 1998.
Full-year Highlights:
Net operating income per share from continuing operations was $5.06, or
$280.9 million, an increase in earnings per share of 43.8 percent compared
to $3.52 per share or $212.5 million in 1998.
Net operating income per share from continuing operations has grown at a
29 percent cumulative average growth rate since going public in 1995.
Asset Accumulation pre-tax operating income was $229.0 million, an 18.8
percent increase from $192.7 million in 1998.
Risk Management pre-tax operating income for the year was $199.6 million,
up 33.4 percent from $149.6 million for the full year 1998.
1999 net income was $295.8 million, or $5.33 per share, up from $201.2
million, or $3.33 per share in 1998.
Page 1
<PAGE>
ALLMERICA FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Quarter ended Year ended
December 31 December 31
(In millions, except % %
per share data) 1999 1998 Change 1999 1998 Change
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
Revenues
Premiums $497.6 $491.6 1.2 $1,950.5 $1,970.6 (1.0)
Universal life and
investment product
policy fees 96.4 79.4 21.4 359.3 296.6 21.1
Net investment income 145.9 157.0 (7.1) 615.7 604.4 1.9
Net realized investment
(losses) gains (15.5) 10.1 N/M 91.0 59.2 53.7
Other income 38.1 30.8 23.7 128.7 103.2 24.7
-------------------- -------------------------
Total revenues $762.5 $768.9 (0.8) $3,145.2 $3,034.0 3.7
==================== =========================
RECONCILIATION FROM NET
OPERATING INCOME TO NET
INCOME
Net operating
income <FN1> $ 80.8 $ 67.1 20.4 $ 280.9 $ 212.5 32.2
Net realized investment
(losses) gains, net of
taxes, minority
interest and
amortization (13.6) 6.4 N/M 63.0 28.8 N/M
Other non-operating
items, net of taxes 1.2 (5.8) N/M 1.2 (26.6) N/M
------------------- ----------------------
Income from continuing
operations 68.4 67.7 1.0 345.1 214.7 60.7
Loss from operations of
discontinued business,
net of taxes 0.0 (1.8) N/M (18.8) (13.5) 39.3
Loss on disposal of
group life and health
business, net of taxes 0.0 0.0 0.0 (30.5) 0.0 N/M
-------------------- -----------------------
Net income $ 68.4 $ 65.9 3.8 $ 295.8 $ 201.2 47.0
==================== =========================
PER SHARE DATA (DILUTED)
Net operating income
<FN1> $ 1.48 $ 1.12 32.1 $ 5.06 $ 3.52 43.8
Net realized investment
(losses) gains, net
of taxes, minority
interest and
amortization (0.25) 0.11 N/M 1.13 0.48 N/M
Other non-operating
items, net of taxes 0.02 (0.10) N/M 0.02 (0.44) N/M
-------------------- ------------------------
Income from continuing
operations 1.25 1.13 10.6 6.21 3.56 74.4
Loss from operations of
discontinued business,
net of taxes 0.0 (0.03) N/M (0.33) (0.23) 43.5
Loss on disposal of
group life and health
business, net of taxes 0.0 0.0 0.0 (0.55) 0.0 N/M
-------------------- ------------------------
Net income <FN2> $ 1.25 $ 1.10 13.6 $ 5.33 $ 3.33 60.1
==================== ========================
Dividends declared to
shareholders $ 0.00 $ 0.00 $ 0.25 $ 0.15
Weighted average shares
outstanding 54.6 59.9 55.5 60.3
<FN>
<FN1>
Net operating income excludes net realized gains and losses and other
items which management believes are not indicative of overall operating
trends, net of taxes and minority interest.
<FN2>
Basic net income per share was $1.26 and $1.11 for the quarters ended
December 31, 1999 and 1998, respectively, and $5.38 and $3.36 for the years
ended December 31, 1999 and 1998, respectively.
</FN>
</TABLE>
N/M - Not meaningful
Page 2
<PAGE>
ALLMERICA FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(In millions, except per share December 31 December 31
data and ratios) 1999 1998 % Change
<S> <C> <C> <C>
BALANCE SHEET
Total investments $ 7,888.7 $ 9,057.6 (12.9)
Separate account assets $17,629.6 $13,697.7 28.7
Total assets $30,769.6 $27,653.1 11.3
Total liabilities $28,229.4 $24,894.5 13.4
Minority interest:
Mandatorily redeemable preferred
securities of a subsidiary trust $ 300.0 $ 300.0 0.0
Shareholders' equity $ 2,240.2 $ 2,458.6 (8.9)
Statutory surplus:
Property and casualty insurance
companies $ 1,089.0 $ 1,269.3 (14.3)
Life and health insurance
companies $ 590.2 $ 1,164.1 (49.3)
Book value per share $ 41.32 $ 41.95 (1.5)
Book value per share, excluding
SFAS No. 115 $ 42.71 $ 38.87 9.9
Shares outstanding <FN1> 54.2 58.6
Stock price $ 55.63 $ 57.88 (3.9)
Price/book value per share 1.3 x 1.4 x (0.1) x
Debbt/equity 8.9 % 8.1 % 0.8 pts
Debt/total capital 7.3 % 6.7 % 0.6 pts
Debt plus preferred securities of a
subsidiary trust/total capital 18.2 % 16.9 % 1.3 pts
<FN>
<FN1>
Shares outstanding do not include common stock equivalents.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Quarter ended Year ended
December 31 December 31
(In millions, except % %
ratios) 1999 1998 Change 1999 1998 Change
<S> <C> <C> <C> <C> <C> <C>
RISK MANAGEMENT
Net premiums written:
Personal lines $279.8 $274.2 2.0 $1,197.2 $1,208.1 (0.9)
Commercial lines 191.9 181.4 5.8 779.8 748.6 4.2
---------------------- -------------------------
Total Risk
Management $471.7 $455.6 3.5 $1,977.0 $1,956.7 1.0
---------------------- -------------------------
Statutory underwriting
income (loss) $ 14.2 $ (2.5) N/M $ (31.2) $ (87.6)(64.4)
Incurred catastrophe
losses $ 3.8 $ 7.9 (51.9) $ 76.9 $ 90.3 (14.8)
PROPERTY AND CASUALTY
RATIOS
Losses 60.9% 64.7% (3.8) pts 63.8% 67.4% (3.6) pts
Loss adjustment
expenses 8.4% 8.2% 0.2 pts 8.4% 8.1% 0.3 pts
Other underwriting
expenses 28.5% 28.9% (0.4) pts 28.5% 28.5% 0.0 pts
Policyholder dividends 0.8% 0.8% 0.0 pts 0.5% 0.6% (0.1) pts
Statutory combined
ratio 98.6% 102.6% (4.0) pts 101.2% 104.6% (3.4) pts
Catastrophe points on
combined ratio 0.8 1.6 (0.8) pts 3.9 4.6 (0.7) pts
</TABLE>
Page 3
<PAGE>
ALLMERICA FINANCIAL CORPORATION
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
Quarter ended Year ended
December 31 December 31
(In millions, except % %
per share data) 1999 1998 Change 1999 1998 Change
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums $497.6 $491.6 1.2 $1,950.5 $1,970.6 (1.0)
Universal life and
investment product
policy fees 96.4 79.4 21.4 359.3 296.6 21.1
Net investment income 145.9 157.0 (7.1) 615.7 604.4 1.9
Net realized investment
(losses) gains (15.5) 10.1 N/M 91.0 59.2 53.7
Other income 38.1 30.8 23.7 128.7 103.2 24.7
-------------------- -------------------------
Total revenues 762.5 768.9 (0.8) 3,145.2 3,034.0 3.7
-------------------- -------------------------
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims,
losses and loss
adjustment expenses 435.5 439.6 (0.9) 1,770.7 1,804.0 (1.8)
Policy acquisition
expenses 113.4 108.0 5.0 429.9 449.6 (4.4)
Sales practice litigation
expense 0.0 0.0 0.0 0.0 31.0 N/M
Restructuring costs (1.9) 9.0 N/M (1.9) 9.0 N/M
Other operating expenses 120.3 122.4 (1.7) 478.5 440.3 8.7
-------------------- -------------------------
Total benefits, losses
and expenses 667.3 679.0 (1.7) 2,677.2 2,733.9 (2.1)
-------------------- -------------------------
Income from continuing
operations before
federal income taxes 95.2 89.9 5.9 468.0 300.1 55.9
Federal income tax
expense 22.8 16.2 40.7 106.9 56.1 90.6
-------------------- -------------------------
Income from continuing
operations before
minority interest 72.4 73.7 (1.8) 361.1 244.0 48.0
-------------------- -------------------------
Minority interest:
Distributions on
mandatorily redeemable
preferred securities
of a subsidiary trust (4.0) (4.0) 0.0 (16.0) (16.0) 0.0
Equity in earnings 0.0 (2.0) N/M 0.0 (13.3) N/M
-------------------- -------------------------
(4.0) (6.0)(33.3) (16.0) (29.3)(45.4)
-------------------- -------------------------
Income from continuing
operations 68.4 67.7 1.0 345.1 214.7 60.7
Loss from operations of
discontinued business
(less applicable income
taxes (benefit) of $(0.8)
for the quarter ended
December 31, 1998, and
$(10.1) and $(7.0) for the
years ended December 31,
1999 and 1998) 0.0 (1.8) N/M (18.8) (13.5) 39.3
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
taxes (benefit) of $(16.4)) 0.0 0.0 0.0 (30.5) 0.0 N/M
-------------------- -------------------------
Net income $ 68.4 $ 65.9 3.8 $ 295.8 $ 201.2 47.0
==================== =========================
PER SHARE DATA (DILUTED)
Income from continuing
operations $ 1.25 $ 1.13 10.6 $ 6.21 $ 3.56 74.4
-------------------- -------------------------
Loss from operations of
discontinued business
(less applicable income
taxes (benefit) of $(0.01)
for the quarter ended
December 31, 1998, and
$(0.19) and $(0.12) for
the years ended
December 31, 1999 and 1998 0.00 (0.03) N/M (0.33) (0.23) 43.5
Loss on disposal of group
life and health business,
including provision of
$1.30 for operating losses
during phase-out period
for the year ended
December 31, 1999, (less
applicable income taxes
(benefit) of $(0.29) for
the year ended December 31,
1999) 0.00 0.00 0.0 (0.55) 0.00 N/M
-------------------- -------------------------
Net income <FN1> $ 1.25 $ 1.10 13.6 $ 5.33 $ 3.33 60.1
==================== =========================
Dividends declared to
shareholders $ 0.00 $ 0.00 $ 0.25 $ 0.15
=============== ==================
Weighted average shares
outstanding 54.6 59.9 55.5 60.3
============== ===================
<FN>
<FN1>
Basic net income per share was $1.26 and $1.11 for the quarters ended
December 31, 1999 and 1998, respectively, and $5.38 and $3.36 for the
years ended December 31, 1999 and 1998, respectively.
</FN>
</TABLE>
Page 4
<PAGE>
ALLMERICA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 December 31
(In millions, except per share data) 1999 1998 % Change
<S> <C> <C> <C>
ASSETS
Investments:
Debt securities, at fair value
(Amortized cost of $7,095.0
and $7,618.2) $ 6,933.8 $ 7,780.8 (10.9)
Equity securities, at fair value
(Cost of $49.5 and $253.1) 83.2 397.1 (79.0)
Mortgage loans 521.2 562.3 (7.3)
Policy loans 170.5 154.3 10.5
Real estate and other long-term
investments 180.0 163.1 10.4
--------------------------------
Total investments 7,888.7 9,057.6 (12.9)
--------------------------------
Cash and cash equivalents 442.2 550.3 (19.6)
Accrued investment income 134.7 142.3 (5.3)
Premiums, accounts and notes
receivable, net 583.5 555.7 5.1
Reinsurance receivable on paid and unpaid
losses, benefits and unearned premiums 1,279.9 1,136.0 12.7
Deferred policy acquisition costs 1,386.8 1,161.2 19.4
Deferred federal income taxes 141.7 19.8 N/M
Other assets 510.2 529.4 (3.6)
Closed Block assets 772.3 803.1 (3.8)
Separate account assets 17,629.6 13,697.7 28.7
--------------------------------
Total assets $30,769.6 $27,653.1 11.3
================================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits $ 2,825.0 $ 2,802.2 0.8
Outstanding claims, losses and loss
adjustment expenses 2,838.6 2,816.3 0.8
Unearned premiums 890.2 843.2 5.6
Contractholder deposit funds and
other policy liabilities 2,041.0 2,637.0 (22.6)
--------------------------------
Total policy liabilities and accruals 8,594.8 9,098.7 (5.5)
--------------------------------
Expenses and taxes payable 795.5 716.1 11.1
Reinsurance premiums payable 73.0 95.4 (23.5)
Trust instruments supported by funding
obligations 50.6 0.0 N/M
Short-term debt 45.0 221.3 (79.7)
Long-term debt 199.5 199.5 0.0
Closed Block liabilities 842.1 872.0 (3.4)
Separate account liabilities 17,628.9 13,691.5 28.8
--------------------------------
Total liabilities 28,229.4 24,894.5 13.4
--------------------------------
MINORITY INTEREST
Mandatorily redeemable preferred
securities of a subsidiary trust 300.0 300.0 0.0
SHAREHOLDERS' EQUITY
Preferred stock, par value $.01 per
share; authorized 20.0 million shares;
issued none 0.0 0.0 0.0
Common stock, par value $.01 per share;
authorized 300.0 million shares;
issued 60.4 million shares 0.6 0.6 0.0
Additional paid-in capital 1,770.5 1,768.8 0.1
Accumulated other comprehensive income (75.3) 180.5 N/M
Retained earnings 882.2 599.9 47.1
Treasury stock at cost (6.2 and 1.8
million shares) (337.8) (91.2) N/M
--------------------------------
Total shareholders' equity 2,240.2 2,458.6 (8.9)
--------------------------------
Total liabilities and shareholders'
equity $30,769.6 27,653.1 11.3
================================
</TABLE>
Page 5
<PAGE>
ALLMERICA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Year ended December 31
(In millions) 1999 1998
<S> <C> <C>
PREFERRED STOCK
Balance at beginning and end of period $ 0.0 $ 0.0
-----------------------
COMMON STOCK
Balance at beginning and end of period 0.6 0.6
-----------------------
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of period 1,768.8 1,755.0
Issuance of common stock 1.7 13.8
-----------------------
Balance at end of period 1,770.5 1,768.8
-----------------------
ACCUMULATED OTHER COMPREHENSIVE INCOME
NET UNREALIZED APPRECIATION ON INVESTMENTS
Balance at beginning of period 180.5 217.9
Net depreciation on available-for-sale
securities (393.8) (82.7)
Benefit for deferred federal income taxes 138.0 28.8
Minority interest 0.0 16.5
-----------------------
Balance at end of period (75.3) 180.5
-----------------------
RETAINED EARNINGS
Balance at beginning of period 599.9 407.8
Net income 295.9 201.2
Dividends to shareholders (13.6) (9.1)
-----------------------
Balance at end of period 882.2 599.9
-----------------------
TREASURY STOCK
Balance at beginning of period (91.2) 0.0
Shares purchased at cost (250.2) (91.2)
Shares reissued at cost 3.6 0.0
-----------------------
Balance at end of period (337.8) (91.2)
-----------------------
Total shareholders' equity $2,240.2 $2,458.6
=======================
</TABLE>
Page 6
<PAGE>
ALLMERICA FINANCIAL CORPORATION
SEGMENT RESULTS
INCOME STATEMENT HIGHLIGHTS
<TABLE>
<CAPTION>
Quarter ended Year ended
December 31 December 31
(In millions, except % %
per share data) 1999 1998 Change 1999 1998 Change
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES <FN1>
Risk Management
Hanover North $191.2 $174.0 9.9 $ 733.1 $ 692.4 5.9
Hanover South 58.4 57.2 2.1 224.9 241.0 (6.7)
Citizens Midwest 145.5 154.0 (5.5) 587.6 616.1 (4.6)
Voluntary Benefits 145.4 146.6 (0.8) 573.5 576.1 (0.5)
Allmerica Specialty 15.1 19.5 (22.6) 69.5 63.3 9.8
Other <FN2> (0.4) 3.4 N/M 0.8 33.2 (97.6)
--------------------------------------------------
555.2 554.7 0.1 2,189.4 2,222.1 (1.5)
--------------------------------------------------
Asset Accumulation
Allmerica Financial
Services 189.5 167.3 13.3 714.8 625.6 14.3
Allmerica Asset
Management 34.2 35.1 (2.6) 150.5 121.7 23.7
--------------------------------------------------
223.7 202.4 10.5 865.3 747.3 15.8
--------------------------------------------------
Corporate 1.1 3.0 (63.3) 6.0 12.9 (53.5)
Eliminations and other (1.6) (1.7) (5.9) (5.9) (7.6) (22.4)
--------------------------------------------------
Total operating revenues $778.4 $758.4 2.6 $3,054.8 $2,974.7 2.7
==================================================
NET OPERATING INCOME
BEFORE TAXES AND MINORITY
INTEREST <FN3>
Risk Management
Hanover North $ 31.8 $ 21.6 47.2 $ 92.5 $ 49.7 86.1
Hanover South 3.8 4.8 (20.8) 14.2 16.2 (12.3)
Citizens Midwest 21.8 14.4 51.4 69.1 30.8 N/M
Voluntary Benefits 15.7 21.2 (25.9) 41.2 60.7 (32.1)
Allmerica Specialty (3.9) (2.2) 77.3 (2.5) 1.6 N/M
Other<FN2> (4.2) (7.4) (43.2) (14.9) (9.4) 58.5
--------------------------------------------------
65.0 52.4 24.0 199.6 149.6 33.4
--------------------------------------------------
Asset Accumulation
Allmerica Financial
Services 54.2 43.5 24.6 205.5 169.0 21.6
Allmerica Asset
Management 5.3 6.7 (20.9) 23.5 23.7 (0.8)
--------------------------------------------------
59.5 50.2 18.5 229.0 192.7 18.8
--------------------------------------------------
Corporate (16.1) (15.3) 5.2 (59.3) (50.9) 16.5
--------------------------------------------------
Total net operating income
before federal income
taxes and minority
interest 108.4 87.3 24.2 369.3 291.4 26.7
Federal income taxes on
operating income (23.6) (13.8) 71.0 (72.4) (53.1) 36.3
Minority interest:
Distributions on
mandatorily redeemable
preferred securities
of a subsidiary trust (4.0) (4.0) 0.0 (16.0) (16.0) 0.0
Equity in earnings 0.0 (2.4) N/M 0.0 (9.8) N/M
--------------------------------------------------
Consolidated net operating
income $ 80.8 $ 67.1 20.4 $ 280.9 $ 212.5 32.2
=================================================
Consolidated net operating
income per share
(diluted) $ 1.48 $ 1.12 32.1 $ 5.06 $ 3.52 43.8
=================================================
Weighted average shares
outstanding (diluted) 54.6 59.9 55.5 60.3
=============== =================
<FN>
<FN1>
Operating revenues exclude net realized gains and losses and other
items which management believes are not indicative of overall
operating trends.
<FN2>
Includes results from certain property and casualty business which the
Company has exited, as well as purchase accounting adjustments.
<FN3>
Net operating income excludes net realized gains and losses and other
items which management believes are not indicative of overall operating
trends, net of taxes and minority interest.
</FN>
</TABLE>
Page 7
<PAGE>
ALLMERICA FINANCIAL CORPORATION
SEGMENT RESULTS
HISTORICAL INCOME STATEMENT HIGHLIGHTS
<TABLE>
<CAPTION>
Year ended December 31
(In millions, except
per share data) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES <FN1>
Risk Management $2,189.4 $2,222.1 $2,227.6 $2,160.4 $2,106.3
-------------------------------------------------
Asset Accumulation
Allmerica Financial
Services 714.8 625.6 610.0 595.0 639.5
Allmerica Asset
Management 150.5 121.7 91.1 110.5 157.6
-------------------------------------------------
865.3 747.3 701.1 705.5 797.1
-------------------------------------------------
Corporate 6.0 12.9 16.1 6.9 (2.4)
Eliminations and other (5.9) (7.6) (11.5) (12.7) (4.4)
-------------------------------------------------
Total operating revenues $3,054.8 $2,974.7 $2,933.3 $2,860.1 $2,896.6
================================================
NET OPERATING INCOME
BEFORE TAXES AND MINORITY
INTEREST <FN2>
Risk Management $ 199.6 $ 149.6 $ 174.2 $ 173.1 $ 212.0
-------------------------------------------------
Asset Accumulation
Allmerica Financial
Services 205.5 169.0 134.6 106.8 60.0
Allmerica Asset
Management 23.5 23.7 18.4 11.5 12.2
-------------------------------------------------
229.0 192.7 153.0 118.3 72.2
-------------------------------------------------
Corporate (59.3) (50.9) (48.0) (58.0) (47.8)
-------------------------------------------------
Total net operating income
before federal income
taxes and minority
interest 369.3 291.4 279.2 233.4 236.4
-------------------------------------------------
Federal income taxes on
operating income (72.4) (53.1) (63.4) (50.8) (67.4)
Minority interest:
Distributions on
mandatorily
redeemable preferred
securities of a
subsidiary trust (16.0) (16.0) (14.5) 0.0 0.0
Equity in earnings 0.0 (9.8) (37.0) (61.5) (69.2)
-------------------------------------------------
Consolidated net operating
income $ 280.9 $ 212.5 $ 164.3 $ 121.1 $ 99.8
=================================================
Consolidated net operating
income per share
(diluted) $ 5.06 $ 3.52 $ 3.00 $ 2.41 $ 1.99
=================================================
Weighted average shares
outstanding (diluted) 55.5 60.3 54.8 50.1 50.1
=================================================
<FN>
<FN1>
Operating revenues exclude net realized gains and losses and other items
which management believes are not indicative of overall operating trends.
<FN2>
Net operating income excludes net realized gains and losses and other
items which management believes are not indicative of overall operating
trends, net of taxes and minority interest.
</FN>
</TABLE>
Page 8
<PAGE>
ALLMERICA FINANCIAL CORPORATION
SEGMENT RESULTS
BALANCE SHEET HIGHLIGHTS
<TABLE>
<CAPTION>
December 31, 1999
Asset Accumulation
--------------------
Allmerica Allmerica
Risk Financial Asset
(In millions) Management Services Management Corporate Total
<S> <C> <C> <C> <C > <C>
Cash and investments $ 3,627.3 $ 3,264.2 $ 1,367.4 $ 72.0 $ 8,330.9
Reinsurance
receivables 946.6 333.3 0.0 0.0 1,279.9
Deferred policy
acquisition costs 173.3 1,213.1 0.4 0.0 1,386.8
Separate account
assets 0.0 17,629.6 0.0 0.0 17,629.6
Other assets 1,121.8 223.2 19.8 5.3 1,370.1
Closed Block assets 0.0 772.3 0.0 0.0 772.3
------------------------------------------------------
Total assets $ 5,869.0 $23,435.7 $ 1,387.6 $ 77.3 $30,769.6
======================================================
Policy liabilities
and accruals:
Future policy
benefits $ 183.5 $ 2,641.5 $ 0.0 $ 0.0 $ 2,825.0
Outstanding claims,
losses and loss
adjustment expenses 2,820.3 18.3 0.0 0.0 2,838.6
Unearned premiums 887.2 3.0 0.0 0.0 890.2
Contractholder
deposit funds and
other policy
liabilities 24.8 700.2 1,316.0 0.0 2,041.0
------------------------------------------------------
Total policy
liabilities and
accruals $ 3,915.8 $ 3,363.0 $ 1,316.0 $ 0.0 $ 8,594.8
======================================================
Separate account
liabilities $ 0.0 $17,628.9 $ 0.0 $ 0.0 $17,628.9
======================================================
Closed Block
liabilities $ 0.0 $ 842.1 $ 0.0 $ 0.0 $ 842.1
======================================================
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998
Asset Accumulation
--------------------
Allmerica Allmerica
Risk Financial Asset
(In millions) Management Services Management Corporate Total
<S> <C> <C> <C> <C > <C>
Cash and investments $ 4,304.9 $ 3,357.9 $ 1,786.4 $158.7 $ 9,607.9
Reinsurance
receivables 797.5 338.5 0.0 0.0 1,136.0
Deferred policy
acquisition costs 167.5 993.1 0.6 0.0 1,161.2
Separate account
assets 0.0 13,697.7 0.0 0.0 13,697.7
Other assets 949.1 271.5 23.9 2.7 1,247.2
Closed Block assets 0.0 803.1 0.0 0.0 803.1
------------------------------------------------------
Total assets $ 6,219.0 $19,461.8 $ 1,810.9 $161.4 $27,653.1
======================================================
Policy liabilities
and accruals:
Future policy
benefits $ 158.0 $ 2,644.2 $ 0.0 $ 0.0 $ 2,802.2
Outstanding claims,
losses and loss
adjustment expenses 2,797.4 18.9 0.0 0.0 2,816.3
Unearned premiums 840.1 3.1 0.0 0.0 843.2
Contractholder deposit
funds and other
policy liabilities 21.4 823.8 1,791.8 0.0 2,637.0
------------------------------------------------------
Total policy
liabilities
and accruals $ 3,816.9 $ 3,490.0 $1,791.8 $ 0.0 $ 9,098.7
======================================================
Separate account
liabilities $ 0.0 $13,691.5 $ 0.0 $ 0.0 $13,691.5
======================================================
Closed Block
liabilities $ 0.0 $ 872.0 $ 0.0 $ 0.0 $ 872.0
======================================================
</TABLE>
Page 9
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
CONDENSED INCOME STATEMENTS
<TABLE>
<CAPTION>
Quarter ended Year ended
December 31 December 31
%
(In millions) 1999 1998 Change 1999 1998 Change
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Net premiums written $471.7 $455.6 3.5 $1,977.0 $1,956.7 1.0
Change in unearned
premiums, net of
prepaid reinsurance
premiums 24.7 34.7 (28.8) (28.8) 11.2 N/M
---------------------------------------------------
Net premiums earned 496.4 490.3 1.2 1,948.2 1,967.9 (1.0)
Net investment income 53.6 58.3 (8.1) 221.4 229.8 (3.7)
Other income 5.2 6.1 (14.8) 19.8 24.4 (18.9)
---------------------------------------------------
Total operating
revenue 555.2 554.7 0.1 2,189.4 2,222.1 (1.5)
---------------------------------------------------
LOSSES AND OPERATING
EXPENSES
Policy benefits, claims,
losses and loss
adjustment expenses 350.6 358.8 (2.3) 1,420.3 1,495.4 (5.0)
Policy acquisition
expenses 94.4 92.0 2.6 370.6 379.7 (2.4)
Other operating
expenses 45.2 51.5 (12.2) 198.9 197.4 0.8
---------------------------------------------------
Total losses and
operating expenses 490.2 502.3 (2.4) 1,989.8 2,072.5 (4.0)
---------------------------------------------------
Net operating income
before taxes 65.0 52.4 24.0 199.6 149.6 33.4
Net realized investment
(losses) gains (6.0) (1.8) N/M 102.5 41.4 N/M
Restructuring costs 1.9 (9.0) N/M 1.9 (9.0) N/M
---------------------------------------------------
Net income before taxes $ 60.9 $ 41.6 46.4 $ 304.0 $ 182.0 67.0
===================================================
</TABLE>
The Risk Management Segment manages its products through five distribution
channels identified as Hanover North, Hanover South, Citizens Midwest,
Allmerica Voluntary Benefits, and Allmerica Specialty.
Hanover North, Hanover South and Citizens Midwest sell property & casualty
insurance products through independent agents 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 & casualty (auto and homeowners) insurance
through employer sponsored programs. This distribution channel also
offers products to members of affinity groups and other organizations.
Allmerica Voluntary Benefits utilizes the segment's regional independent
agent network as well as a national accounts sales force focused on large
sized accounts countrywide. In addition, the affinity group property &
casualty insurance business, which was included in Citizens Midwest,
Hanover North and Hanover South in the first quarter of 1999, is also
included in the Allmerica Voluntary Benefits distribution channel.
Allmerica Specialty offers special niche property & casualty products in
selected markets.
Page 10
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
(In millions) Quarter ended December 31, 1999
Hanover Hanover Citizens Voluntary Allmerica Other
North South Midwest Benefits Specialty <FN1> Total
<S> <C> <C> <C> <C> <C> <C> <C>
Net premiums
earned $169.5 $ 52.7 $128.5 $134.3 $ 10.7 $ 0.7 $496.4
Policy benefits
claims,
losses and
loss adjustment
expenses 109.8 38.0 86.2 99.5 12.5 0.4 346.4
Policy
acquisition
and other
underwriting
expenses 49.2 15.8 34.4 29.2 4.5 3.3 136.4
Policyholders'
dividends 0.3 0.8 3.0 0.0 0.1 0.0 4.2
----------------------------------------------------------
Underwriting
profit (loss) 10.2 (1.9) 4.9 5.6 (6.4) (3.0) 9.4
----------------------------------------------------------
Net investment
income 20.4 5.5 16.5 10.5 1.9 (1.2) 53.6
Other income and
expenses, net 1.2 0.2 0.4 (0.4) 0.6 0.0 2.0
----------------------------------------------------------
Net operating
income (loss)
before taxes $ 31.8 $ 3.8 $ 21.8 $ 15.7 $ (3.9) $ (4.2) $ 65.0
==========================================================
PRETAX CATASTROPHE
LOSSES $ 0.0 $ (0.6) $ 3.1 $ 1.4 $ 0.1 $ (0.2) $ 3.8
==========================================================
<FN>
<FN1>
Includes results from certain property and casualty business which the
Company has exited, as well as purchase accounting adjustments.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Quarter ended December 31, 1998
Hanover Hanover Citizens Voluntary Allmerica Other
(In millions) North South Midwest Benefits Specialty <FN1> Total
<S> <C> <C> <C> <C> <C> <C> <C>
Net premiums
earned $152.4 $ 51.2 $136.3 $133.9 $ 13.4 $ 3.1 $490.3
Policy benefits,
claims, losses
and loss
adjustment
expenses 105.0 35.2 101.3 95.3 9.6 8.6 355.0
Policy
acquisition
and other
underwriting
expenses 45.0 17.1 37.0 28.4 8.4 2.1 138.0
Policyholders'
dividends 2.4 0.1 1.3 0.0 0.0 0.0 3.8
---------------------------------------------------------
Underwriting
(loss) profit 0.0 (1.2) (3.3) 10.2 (4.6) (7.6) (6.5)
---------------------------------------------------------
Net investment
income 20.9 5.8 17.2 12.2 2.2 0.0 58.3
Other income and
expenses, net 0.7 0.2 0.5 (1.2) 0.2 0.2 0.6
---------------------------------------------------------
Net operating
income (loss)
before taxes
and minority
interest $ 21.6 $ 4.8 $ 14.4 $ 21.2 $ (2.2) $ (7.4) $ 52.4
=========================================================
PRETAX CATASTROPHE
LOSSES $ 0.1 $ (0.9) $ 3.2 $ 5.5 $ 0.0 $ 0.0 $ 7.9
=========================================================
<FN>
<FN1>
Includes results from certain property and casualty business which the
Company has exited, as well as purchase accounting adjustments.
</FN>
</TABLE>
Page 11
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
(In millions) Year ended December 31, 1999
Hanover Hanover Citizens Voluntary Allmerica Other
North South Midwest Benefits Specialty <FN1> Total
<S> <C> <C> <C> <C> <C> <C> <C>
Net premiums
earned $644.9 $202.0 $520.3 $525.6 $ 50.1 $ 5.3 $1,948.2
Policy benefits,
claims, losses
and loss
adjustment
expenses 438.0 146.1 373.0 402.9 44.6 3.4 1,408.0
Policy
acquisition
and other
underwriting
expenses 197.0 63.5 139.9 124.5 18.8 12.2 555.9
Policyholders'
dividends 5.5 1.1 5.6 0.0 0.1 0.0 12.3
-----------------------------------------------------------
Underwriting
profit (loss) 4.4 (8.7) 1.8 (1.8) (13.4) (10.3) (28.0)
-----------------------------------------------------------
Net investment
income 83.5 23.0 65.5 45.4 8.6 (4.6) 221.4
Other income
and expenses,
net 4.6 (0.1) 1.8 (2.4) 2.3 0.0 6.2
-----------------------------------------------------------
Net operating
income (loss)
before taxes
and minority
interest $ 92.5 $ 14.2 $ 69.1 $ 41.2 $(2.5) $(14.9) $ 199.6
===========================================================
PRETAX CATASTROPHE
LOSSES $ 13.3 $ 11.3 $ 19.7 $ 32.5 $ 0.1 $ 0.0 $ 76.9
===========================================================
<FN>
<FN1>
Includes results from certain property and casualty business which the
Company has exited, as well as purchase accounting adjustments.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1998
Hanover Hanover Citizens Voluntary Allmerica Other
(In millions) North South Midwest Benefits Specialty <FN1> Total
<S> <C> <C> <C> <C> <C> <C> <C>
Net premiums
earned $606.1 $217.4 $546.2 $525.8 $ 39.4 $ 33.0 $1,967.9
Policy benefits,
claims, losses
and loss
adjustment
expenses 454.4 152.0 425.9 392.5 24.9 33.8 1,483.5
Policy
acquisition
and other
underwriting
expenses 182.9 72.5 153.7 118.0 21.0 8.3 556.4
Policyholders'
dividends 5.4 0.3 5.7 0.0 0.0 0.5 11.9
-----------------------------------------------------------
Underwriting
(loss) profit (36.6) (7.4) (39.1) 15.3 (6.5) (9.6) (83.9)
-----------------------------------------------------------
Net investment
income 81.8 22.8 68.1 48.3 8.6 0.2 229.8
Other income
and expenses,
net 4.5 0.8 1.8 (2.9) (0.5) 0.0 3.7
-----------------------------------------------------------
Net operating
income (loss)
before taxes
and minority
interest $ 49.7 $ 16.2 $ 30.8 $ 60.7 $ 1.6 $ (9.4) $ 149.6
===========================================================
PRETAX CATASTROPHE
LOSSES $ 19.0 $ 11.3 $ 28.7 $ 31.3 $ 0.0 $ 0.0 $ 90.3
===========================================================
<FN>
<FN1>
Includes results from certain property and casualty business which the
Company has exited, as well as purchase accounting adjustments.
</FN>
</TABLE>
Page 12
</PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
(In millions, Quarter ended December 31, 1999
except ratios) Hanover Hanover Citizens Voluntary Allmerica
North South Midwest Benefits Specialty Other Total
<S> <C> <C> <C> <C> <C> <C> <C>
NET PREMIUMS
WRITTEN
Personal
automobile $ 66.8 $ 10.3 $ 32.9 $ 95.0 $ 0.0 $ (1.2) $ 203.8
Homeowners 24.1 7.9 5.7 28.5 0.0 0.1 66.3
Workers'
compensation 17.4 5.7 16.4 0.0 0.7 0.6 40.8
Commercial
automobile 20.8 6.6 22.5 0.0 2.6 0.1 52.6
Commercial
multiple
peril 32.7 13.8 27.9 0.0 2.4 0.0 76.8
Other property
& casualty 9.8 4.2 11.1 2.6 3.1 0.6 31.4
-----------------------------------------------------------
Total $171.6 $ 48.5 $116.5 $126.1 $ 8.8 $ 0.2 $ 471.7
===========================================================
NET PREMIUMS
EARNED
Personal
automobile $ 68.9 $ 10.9 $ 37.8 $104.0 $ 0.0 $(0.1) $ 221.5
Homeowners 23.8 8.6 6.1 27.7 0.0 0.1 66.3
Workers'
compensation 16.8 6.1 21.9 0.0 1.4 0.1 46.3
Commercial
automobile 19.3 7.0 24.0 0.0 2.0 0.2 52.5
Commercial
multiple
peril 30.2 15.6 27.0 0.0 3.4 0.0 76.2
Other property
& casualty 10.5 4.5 11.7 2.6 3.9 0.4 33.6
-----------------------------------------------------------
Total $169.5 $ 52.7 $128.5 $134.3 $ 10.7 $ 0.7 $ 496.4
===========================================================
POLICY BENEFITS,
CLAIMS AND LOSSES
Personal
automobile $ 38.1 $ 5.7 $ 23.8 $ 73.9 $ 0.0 $(0.1) $ 141.4
Homeowners 10.5 3.4 1.2 14.3 0.0 0.0 29.4
Workers'
compensation 13.4 5.5 15.9 0.0 1.6 (0.5) 35.9
Commercial
automobile 12.2 5.1 17.3 0.0 2.0 0.3 36.9
Commercial
multiple
peril 16.9 10.6 10.8 0.0 3.6 (1.1) 40.8
Other property
& casualty 4.7 2.0 7.3 0.8 3.1 1.6 19.5
-----------------------------------------------------------
Total $ 95.8 $ 32.3 $ 76.3 $ 89.0 $ 10.3 $ 0.2 $ 303.9
===========================================================
LOSS ADJUSTMENT
EXPENSES $ 14.0 $ 5.7 $ 9.9 $ 10.5 $ 2.2 $ 0.2 $ 42.5
===========================================================
STATUTORY RATIOS
LOSSES
Personal
automobile 55.3% 52.3% 63.0% 71.1% 0.0% N/M 63.8%
Homeowners 44.3% 39.4% 19.8% 51.9% 0.0% N/M 44.5%
Workers'
compensation 76.6% 85.9% 64.4% 0.0% 66.7% N/M 70.4%
Commercial
automobile 63.2% 72.9% 72.1% 0.0% 100.0% N/M 70.3%
Commercial
multiple
peril 55.8% 68.0% 40.0% 0.0% 105.9% N/M 53.5%
Other property
& casualty 44.8% 44.4% 62.4% 30.8% 79.5% N/M 58.0%
-----------------------------------------------------------
Total 56.3% 60.9% 58.1% 66.3% 91.2% N/M 60.6%
===========================================================
LOSS ADJUSTMENT
EXPENSES 8.2% 10.8% 7.2% 7.4% 21.6% N/M 8.4%
===========================================================
</TABLE>
Page 13
</PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
(In millions, Quarter ended December 31, 1998
except ratios) Hanover Hanover Citizens Voluntary Allmerica
North South Midwest Benefits Specialty Other Total
<S> <C> <C> <C> <C> <C> <C> <C>
NET PREMIUMS
WRITTEN
Personal
automobile $ 58.9 $ 12.5 $ 38.0 $ 94.1 $ 0.0 $ 0.1 $ 203.6
Homeowners 23.2 7.9 8.0 23.6 0.0 (1.8) 60.9
Workers'
compensation 15.2 5.5 21.7 0.0 0.8 0.0 43.2
Commercial
automobile 16.6 6.5 21.0 0.0 2.6 0.6 47.3
Commercial
multiple
peril 28.7 13.3 22.2 0.0 4.0 (0.3) 67.9
Other property
& casualty 7.2 4.8 10.4 2.6 5.6 2.1 32.7
----------------------------------------------------------
Total $149.8 $ 50.5 $121.3 $120.3 $ 13.0 $ 0.7 $ 455.6
==========================================================
NET PREMIUMS
EARNED
Personal
automobile $ 63.4 $ 13.4 $ 43.9 $106.5 $ 0.0 $ 0.0 $ 227.2
Homeowners 22.3 8.5 8.9 25.0 0.0 0.6 65.3
Workers'
compensation 15.7 5.6 26.6 0.0 1.0 0.4 49.3
Commercial
automobile 17.0 6.3 22.5 0.0 2.2 1.1 49.1
Commercial
multiple
peril 27.0 13.2 24.8 0.0 3.7 1.1 69.8
Other property
& casualty 7.0 4.2 9.6 2.4 6.5 (0.1) 29.6
----------------------------------------------------------
Total $152.4 $ 51.2 $136.3 $133.9 $ 13.4 $ 3.1 $ 490.3
==========================================================
POLICY BENEFITS,
CLAIMS AND LOSSES
Personal
automobile $ 41.5 $ 8.1 $ 26.0 $ 69.6 $ 0.0 $ 1.6 $ 146.8
Homeowners 9.3 3.0 8.5 16.7 0.0 0.0 37.5
Workers'
compensation 17.1 3.4 10.4 0.0 0.4 0.0 31.3
Commercial
automobile 11.6 5.4 19.3 (0.1) 2.6 1.8 40.6
Commercial
multiple
peril 11.6 10.2 23.1 0.0 3.3 2.9 51.1
Other property
& casualty (0.7) 0.9 6.3 1.0 2.4 0.1 10.0
----------------------------------------------------------
Total $ 90.4 $ 31.0 $ 93.6 $ 87.2 $ 8.7 $ 6.4 $ 317.3
==========================================================
LOSS ADJUSTMENT
EXPENSES $ 14.6 $ 4.2 $ 7.7 $ 8.1 $ 0.9 $ 2.2 $ 37.7
==========================================================
STATUTORY RATIOS
LOSSES
Personal
automobile 65.5% 60.4% 59.2% 65.3% 0.0% N/M 64.6%
Homeowners 41.7% 35.3% 95.5% 66.8% 0.0% N/M 57.5%
Workers'
compensation 108.2% 60.7% 39.4% 0.0% 14.3% N/M 63.8%
Commercial
automobile 68.4% 85.7% 86.2% N/M 118.2% N/M 82.9%
Commercial
multiple
peril 43.1% 77.3% 92.8% 0.0% 89.2% N/M 73.2%
Other property
& casualty N/M 21.4% 65.8% 41.2% 30.0% N/M 32.2%
-----------------------------------------------------------
Total 59.3% 60.5% 68.7% 65.1% 59.6% N/M 64.6%
===========================================================
LOSS ADJUSTMENT
EXPENSES 10.0% 11.5% 7.1% 6.4% 7.2% N/M 8.2%
===========================================================
</TABLE>
Page 14
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
(In millions, Year ended December 31, 1999
except ratios) Hanover Hanover Citizens Voluntary Allmerica
North South Midwest Benefits Specialty Other Total
<S> <C> <C> <C> <C> <C> <C> <C>
NET PREMIUMS
WRITTEN
Personal
automobile $ 270.5 $ 43.1 $ 154.0 $ 436.0 $ 0.0 $ 1.6 $ 905.2
Homeowners 93.1 30.7 25.8 99.0 0.0 0.2 248.8
Workers'
compensation 67.1 25.0 98.5 0.0 3.7 0.7 195.0
Commercial
automobile 80.2 28.3 87.4 0.0 8.0 (0.6) 203.3
Commercial
multiple
peril 116.8 54.9 108.2 0.0 9.5 (0.1) 289.3
Other property
& casualty 40.4 16.4 47.4 10.6 19.0 1.6 135.4
------------------------------------------------------------
Total $ 668.1 $ 198.4 $ 521.3 $ 545.6 $ 40.2 $ 3.4 $1,977.0
============================================================
NET PREMIUMS
EARNED
Personal
automobile $ 261.0 $ 45.5 $ 160.5 $ 424.5 $ 0.0 $ 3.0 $ 894.5
Homeowners 91.7 32.0 27.8 91.0 0.0 0.5 243.0
Workers'
compensation 64.0 23.9 97.6 0.0 5.3 (0.1) 190.7
Commercial
automobile 74.4 27.7 86.1 0.0 9.7 (0.2) 197.7
Commercial
multiple
peril 113.7 55.2 102.5 0.0 14.5 0.4 286.3
Other property
& casualty 40.1 17.7 45.8 10.1 20.6 1.7 136.0
------------------------------------------------------------
Total $ 644.9 $ 202.0 $ 520.3 $ 525.6 $ 50.1 $ 5.3 $1,948.2
============================================================
POLICY BENEFITS,
CLAIMS AND LOSSES
Personal
automobile $ 159.4 $ 25.7 $ 107.9 $ 284.7 $ 0.0 $ 0.5 $ 578.2
Homeowners 46.9 17.8 18.4 72.9 0.0 0.1 156.1
Workers'
compensation 42.2 17.2 58.0 0.0 2.0 2.4 121.8
Commercial
automobile 50.0 19.6 63.8 0.0 9.1 (1.8) 140.7
Commercial
multiple
peril 70.9 37.1 65.4 0.0 12.1 (3.1) 182.4
Other property
& casualty 13.1 7.6 22.0 4.0 13.4 4.0 64.1
------------------------------------------------------------
Total $ 382.5 $ 125.0 $ 335.5 $ 361.6 $ 36.6 $ 2.1 $1,243.3
============================================================
LOSS ADJUSTMENT
EXPENSES $ 55.5 $ 21.1 $ 37.5 $ 41.3 $ 8.0 $ 1.3 $ 164.7
============================================================
STATUTORY RATIOS
LOSSES
Personal
automobile 61.1% 56.5% 67.2% 67.1% 0.0% N/M 64.6%
Homeowners 51.1% 55.6% 66.1% 80.1% 0.0% N/M 64.2%
Workers'
compensation 65.4% 71.4% 57.3% 0.0% N/M N/M 61.9%
Commercial
automobile 67.2% 70.8% 74.1% 0.0% 93.8% N/M 71.2%
Commercial
multiple
peril 62.4% 67.2% 63.8% 0.0% 83.4% N/M 63.7%
Other property
& casualty 32.7% 42.9% 48.0% 39.6% 65.5% N/M 47.2%
------------------------------------------------------------
Total 59.3% 61.8% 64.0% 68.8% 71.4% N/M 63.6%
============================================================
LOSS ADJUSTMENT
EXPENSES 8.6% 10.4% 7.2% 7.9% 16.4% N/M 8.4%
===========================================================
</TABLE>
Page 15
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
(In millions, Year ended December 31, 1998
except ratios) Hanover Hanover Citizens Voluntary Allmerica
North South Midwest Benefits Specialty Other Total
<S> <C> <C> <C> <C> <C> <C> <C>
NET PREMIUMS
WRITTEN
Personal
automobile $ 256.5 $ 54.2 $ 176.5 $ 419.4 $ 0.0 $ 1.5 $ 908.1
Homeowners 90.6 33.0 35.4 99.0 0.0 (0.9) 257.1
Workers'
compensation 55.5 21.4 100.6 0.0 2.7 0.0 180.2
Commercial
automobile 67.7 25.9 88.5 0.0 6.5 2.4 191.0
Commercial
multiple
peril 108.8 53.1 101.4 0.0 15.6 1.9 280.8
Other property
& casualty 37.0 20.5 45.1 9.1 23.3 4.5 139.5
------------------------------------------------------------
Total $ 616.1 $ 208.1 $ 547.5 $ 527.5 $ 48.1 $ 9.4 $1,956.7
============================================================
NET PREMIUMS
EARNED
Personal
automobile $ 248.9 $ 60.1 $ 180.3 $ 422.5 $ 0.0 $ 2.2 $ 914.0
Homeowners 87.5 36.8 37.0 94.6 0.0 4.4 260.3
Workers'
compensation 59.9 20.8 101.4 0.0 4.4 0.6 187.1
Commercial
automobile 66.0 25.6 87.1 0.0 5.6 5.5 189.8
Commercial
multiple
peril 107.4 53.6 98.1 0.0 10.4 9.4 278.9
Other property
& casualty 36.4 20.5 42.3 8.7 19.0 10.9 137.8
------------------------------------------------------------
Total $ 606.1 $ 217.4 $ 546.2 $ 525.8 $ 39.4 $33.0 $1,967.9
============================================================
POLICY BENEFITS,
CLAIMS AND LOSSES
Personal
automobile $ 173.6 $ 36.2 $ 117.8 $ 280.5 $ 0.0 $ 3.7 $ 611.8
Homeowners 52.7 23.1 39.4 81.1 (0.1) 1.6 197.8
Workers'
compensation 44.4 11.1 60.2 0.0 1.0 0.0 116.7
Commercial
automobile 47.7 18.8 67.0 (0.1) 4.6 3.9 141.9
Commercial
multiple
peril 58.8 37.7 77.1 0.0 5.6 11.7 190.9
Other property
& casualty 15.7 6.9 24.1 3.7 11.0 7.0 68.4
------------------------------------------------------------
Total $ 392.9 $ 133.8 $ 385.6 $ 365.2 $ 22.1 $27.9 $1,327.5
============================================================
LOSS ADJUSTMENT
EXPENSES $ 61.5 $ 18.2 $ 40.3 $ 27.3 $ 2.8 $ 5.9 $ 156.0
============================================================
STATUTORY RATIOS
LOSSES
Personal
automobile 69.8% 60.2% 65.4% 66.4% 0.0% N/M 66.9%
Homeowners 60.1% 62.8% 106.5% 85.6% N/M N/M 76.0%
Workers'
compensation 74.1% 53.4% 59.9% 0.0% 7.7% N/M 62.5%
Commercial
automobile 72.2% 73.4% 77.0% N/M 82.1% N/M 74.8%
Commercial
multiple
peril 54.8% 70.3% 78.8% 0.0% 53.8% N/M 68.5%
Other property
& casualty 43.3% 33.7% 56.7% 43.1% 53.5% N/M 49.0%
------------------------------------------------------------
Total 64.8% 61.6% 70.7% 69.5% 52.8% N/M 67.4%
============================================================
LOSS ADJUSTMENT
EXPENSES 9.6% 8.9% 7.6% 7.2% 7.7% N/M 8.1%
===========================================================
</TABLE>
Page 16
<PAGE>
ALLMERICA FINANCIAL CORPORATION
PROPERTY AND CASUALTY
SELECTED FINANCIAL INFORMATION AND SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
December 31 December 31
(In millions) 1999 1998
<S> <C> <C>
INVESTMENTS
Tax exempt debt securities $ 2,084.7 $ 2,474.1
Taxable debt securities 1,165.0 1,056.7
Equity securities 31.9 333.9
Other investments 1.4 2.2
-----------------------
Total investments $ 3,283.0 $ 3,866.9
=======================
</TABLE>
<TABLE>
<CAPTION>
Quarter ended Year ended
December 31 December 31
(In millions, except ratios) 1999 1998 1999 1998
<S> <C> <C> <C> <C>
INVESTMENT RESULTS
Net investment income
before taxes $ 53.6 $ 58.3 $ 221.4 $ 229.8
Net investment income
after taxes 45.3 50.0 185.1 193.5
Effective tax rate on
investment income 15.5% 14.2% 16.4% 15.8%
-----------------------------------------
NET REALIZED GAINS
Net realized (losses) gains
before taxes $ (6.0) $ (1.8) $ 102.5 $ 41.4
Net realized (losses) gains
after taxes (8.5) (4.5) 66.6 26.9
Effective tax rate on net
realized gains N/M N/M 35.0% 35.0%
-----------------------------------------
EARNED PREMIUM BY STATE
Michigan $ 192.2 $ 196.1 $ 750.1 $ 787.3
Massachusetts 78.6 72.8 305.7 277.8
New York 47.0 45.5 179.7 180.6
New Jersey 31.1 31.1 126.2 118.0
Maine 19.9 17.4 73.4 67.2
Indiana 18.0 19.6 73.2 71.2
Connecticut 12.1 12.4 49.2 47.2
Illinois 13.1 11.5 48.2 45.8
Other 83.9 83.4 340.6 371.2
-----------------------------------------
$ 495.9 $ 489.8 $1,946.3 $1,966.3
=========================================
</TABLE>
Page 17
<PAGE>
ALLMERICA FINANCIAL CORPORATION
PROPERTY AND CASUALTY
SELECTED FINANCIAL INFORMATION AND SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
Quarter ended Quarter ended
December 31, 1999 December 31, 1998
(In millions, except ratios) Hanover Citizens Hanover Citizens
<S> <C> <C> <C> <C>
Net premiums written $ 276.5 $ 200.2 $ 253.0 $ 203.8
Change in unearned premiums,
net of prepaid reinsurance
premiums (5.2) (20.7) (14.7) (19.9)
------------------------------------------
Net premiums earned 281.7 220.9 267.7 223.7
------------------------------------------
Losses and loss adjustment
expenses
Paid 230.7 164.0 213.5 166.0
Change in reserves (36.8) (9.7) (21.6) 0.2
------------------------------------------
Losses and LAE incurred 193.9 154.3 191.9 166.2
------------------------------------------
Policy acquisition and other
underwriting expenses <FN1> 87.1 48.9 81.6 50.3
Policyholders' dividends 1.5 2.7 2.6 1.3
------------------------------------------
Statutory underwriting (loss)
Profit $ (0.8) $ 15.0 $ (8.4) $ 5.9
==========================================
STATUTORY NET INCOME $ 25.5 $ 28.4 $ 13.3 $ 23.0
==========================================
STATUTORY RATIOS
Losses 59.5% 62.6% 61.6% 68.5%
Loss adjustment expenses 9.3% 7.2% 10.2% 5.8%
Policy acquisition and other
underwriting expenses 31.5% 24.4% 32.3% 24.7%
Policyholders' dividends 0.5% 1.2% 1.0% 0.6%
------------------------------------------
Combined 100.8% 95.4% 105.1% 99.6%
==========================================
<FN>
<FN1>
Includes corporate overhead.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1999 December 31, 1998
(In millions, except ratios) Hanover Citizens Hanover Citizens
<S> <C> <C> <C> <C>
Net premiums written $ 1,128.9 $ 860.9 $ 1,071.0 $ 888.2
Change in unearned premiums,
net of prepaid reinsurance
premiums 24.3 4.9 (15.3) 4.2
------------------------------------------
Net premiums earned 1,104.6 856.0 1,086.3 884.0
------------------------------------------
Losses and loss adjustment
expenses
Paid 812.7 686.4 842.1 676.8
Change in reserves (37.9) (47.2) (39.9) 8.4
------------------------------------------
Losses and LAE incurred 774.8 639.2 802.2 685.2
------------------------------------------
Policy acquisition and other
underwriting expenses <FN1> 349.4 217.9 341.6 216.8
Policyholders' dividends 6.4 4.1 6.5 5.6
------------------------------------------
Statutory underwriting loss $ (26.0) $ (5.2) $ (64.0) $ (23.6)
==========================================
STATUTORY NET INCOME $ 377.0 $ 131.9 $ 92.7 $ 88.0
==========================================
STATUTORY SURPLUS $ 1,085.7 $ 458.0 $ 1,261.0 $ 620.7
==========================================
STATUTORY RATIOS
Losses 61.0% 67.2% 64.7% 70.7%
Loss adjustment expenses 9.1% 7.5% 9.2% 6.8%
Policy acquisition and other
underwriting expenses 31.0% 25.3% 31.9% 24.4%
Policyholders' dividends 0.6% 0.5% 0.6% 0.6%
------------------------------------------
Combined 101.7% 100.5% 106.4% 102.5%
==========================================
<FN>
<FN1>
Includes corporate overhead.
</FN>
</TABLE>
Page 18
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA FINANCIAL SERVICES
CONDENSED INCOME STATEMENTS
<TABLE>
<CAPTION>
Quarter ended Year ended
December 31 December 31
% %
(In millions) 1999 1998 Change 1999 1998 Change
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums $ 1.2 $ 1.3 (7.7) $ 2.3 $ 2.7 (14.8)
Universal life and
investment product
policy fees 96.4 79.4 21.4 359.3 296.6 21.1
Net investment income 60.3 64.0 (5.8) 251.1 253.1 (0.8)
Other income 27.8 18.8 47.9 87.7 62.9 39.4
Operating contribution
from the Closed Block 3.8 3.8 0.0 14.4 10.3 39.8
----------------------------------------------
Total operating revenue 189.5 167.3 13.3 714.8 625.6 14.3
----------------------------------------------
POLICY BENEFITS, CLAIMS AND
OPERATING EXPENSES
Policy benefits, claims and
losses 58.3 54.7 6.6 232.1 219.3 5.8
Policy acquisition expenses 19.8 16.9 17.2 65.5 59.8 9.5
Other operating expenses 57.2 52.2 9.6 211.7 177.5 19.3
----------------------------------------------
Total policy benefits,
claims and operating
expenses 135.3 123.8 9.3 509.3 456.6 11.5
----------------------------------------------
Net operating income before
taxes 54.2 43.5 24.6 205.5 169.0 21.6
Net realized investment
gains (losses), net of
amortization 1.0 (0.1) N/M 17.2 (0.5) N/M
Sales practice litigation
expense 0.0 0.0 0.0 0.0 (31.0) N/M
Other non-operating items 0.0 0.0 0.0 0.0 (0.8) N/M
----------------------------------------------
Net income before taxes $ 55.2 $ 43.4 27.2 $222.7 $136.7 62.9
==============================================
</TABLE>
Page 19
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA FINANCIAL SERVICES
OPERATING INCOME BY PRODUCT LINE
<TABLE>
<CAPTION>
(In millions) Quarter ended December 31, 1999
Variable Group
Individual Universal Universal Closed Retirement All
Annuities Life Life Block Products Others Total
<FN1> <FN2>
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums $ 0.0 $ 0.0 $ 0.0 $ 8.6 $ 0.9 $ 0.3 $ 9.8
Universal life
and investment
product policy
fees 52.9 19.9 16.7 0.0 6.9 0.0 96.4
Net investment
income 17.3 0.3 19.6 13.2 19.4 3.7 73.5
Other income 11.3 1.4 0.2 0.0 1.7 13.2 27.8
---------------------------------------------------------------------
Total
operating
revenue 81.5 21.6 36.5 21.8 28.9 17.2 207.5
---------------------------------------------------------------------
POLICY BENEFITS,
CLAIMS AND
OPERATING EXPENSES
Policy benefits,
claims and
losses 19.6 2.7 16.9 17.3 17.1 2.0 75.6
Policy acquisition
expenses 11.9 1.9 5.2 0.8 0.8 0.0 20.6
----------------------------------------------------------------------
Total policy
benefits,
claims, and
policy
acquisition
expenses 31.5 4.6 22.1 18.1 17.9 2.0 96.2
---------------------------------------------------------------------
Operating income
before other
operating
expenses $ 50.0 $ 17.0 $ 14.4 $ 3.7 $ 11.0 $ 15.2 111.3
===========================================================
Other operating
expenses 57.1<FN3>
---------
Net operating
income before
taxes $ 54.2
=========
<FN>
<FN1>
Includes defined benefit and defined contribution plan products and services.
<FN2>
Includes non-insurance activities and products in runoff (e.g.YRT,DI).
<FN3>
Includes other operating expenses from the Closed Block of approximately
$(0.1) million for the quarter ended December 31, 1999.
</FN>
</TABLE>
<TABLE>
<CAPTION>
(In millions) Quarter ended December 31, 1998
Variable Group
Individual Universal Universal Closed Retirement All
Annuities Life Life Block Products Others Total
<FN1> <FN2>
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums $ 0.0 $ (0.2) $ 0.1 $ 9.1 $ 0.9 $ 0.5 $ 10.4
Universal life
and investment
product policy
fees 38.9 17.2 17.4 0.0 5.9 0.0 79.4
Net investment
income 16.7 (0.4) 19.2 13.4 20.2 8.3 77.4
Other income 6.2 1.3 0.2 0.0 3.2 7.9 18.8
--------------------------------------------------------------------
Total
operating
revenue 61.8 17.9 36.9 22.5 30.2 16.7 186.0
--------------------------------------------------------------------
POLICY BENEFITS,
CLAIMS AND
OPERATING EXPENSES
Policy benefits,
claims and
losses 13.9 3.9 19.8 18.1 12.9 4.2 72.8
Policy acquisition
expenses 10.3 0.9 4.9 0.5 0.8 0.0 17.4
---------------------------------------------------------------------
Total policy
benefits,
claims, and
policy
acquisition
expenses 24.2 4.8 24.7 18.6 13.7 4.2 90.2
--------------------------------------------------------------------
Operating income
before other
operating
expenses $ 37.6 $ 13.1 $ 12.2 $ 3.9 $ 16.5 $ 12.5 95.8
=============================================================
Other operating
expenses 52.3<FN3>
-------
Net operating
income before
taxes $ 43.5
========
<FN>
<FN1>
Includes defined benefit and defined contribution plan products and services.
<FN2>
Includes non-insurance activities and products in runoff (e.g.YRT,DI).
<FN3>
Includes other operating expenses from the Closed Block of approximately
$0.1 million for the quarter ended December 31, 1998.
</FN>
</TABLE>
Page 20
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA FINANCIAL SERVICES
OPERATING INCOME BY PRODUCT LINE
<TABLE>
<CAPTION>
(In millions) Year ended December 31, 1999
Variable Group
Individual Universal Universal Closed Retirement All
Annuities Life Life Block Products Others Total
<FN1> <FN2>
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums $ 0.0 $ 0.0 $ 0.2 $ 52.2 $ 0.9 $ 1.2 $ 54.5
Universal life
and investment
product policy
fees 192.7 75.1 68.1 0.0 23.4 0.0 359.3
Net investment
income 70.4 0.8 78.4 53.7 79.4 22.1 304.8
Other income 33.9 4.5 0.9 0.0 8.8 39.6 87.7
--------------------------------------------------------------------
Total
operating
revenue 297.0 80.4 147.6 105.9 112.5 62.9 806.3
--------------------------------------------------------------------
POLICY BENEFITS,
CLAIMS AND
OPERATING EXPENSES
Policy benefits,
claims and
losses 76.6 23.2 68.9 88.9 57.9 5.5 321.0
Policy acquisition
expenses 36.5 6.8 19.6 2.5 2.6 0.0 68.0
---------------------------------------------------------------------
Total policy
benefits,
claims, and
policy
acquisition
expenses 113.1 30.0 88.5 91.4 60.5 5.5 389.0
--------------------------------------------------------------------
Operating income
before other
operating
expenses $183.9 $ 50.4 $ 59.1 $ 14.5 $ 52.0 $ 57.4 417.3
============================================================
Other operating
expenses 211.8 <FN3>
--------
Net operating
income before
taxes $ 205.5
========
<FN>
<FN1>
Includes defined benefit and defined contribution plan products and services.
<FN2>
Includes non-insurance activities and products in runoff (e.g.YRT,DI).
<FN3>
Includes other operating expenses from the Closed Block of approximately
$0.1 million for the year ended December 31, 1999.
</FN>
</TABLE>
<TABLE>
<CAPTION>
(In millions) Year ended December 31, 1998
Variable Group
Individual Universal Universal Closed Retirement All
Annuities Life Life Block Products Others Total
<FN1> <FN2>
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums $ 0.0 $ 0.0 $ 0.0 $ 55.4 $ 1.0 $ 1.7 $ 58.1
Universal life
and investment
product policy
fees 137.0 64.7 71.2 0.0 23.7 0.0 296.6
Net investment
income 71.6 (0.8) 79.7 53.3 85.5 17.1 306.4
Other income 25.0 3.6 0.8 0.0 9.0 24.5 62.9
--------------------------------------------------------------------
Total
operating
revenue 233.6 67.5 151.7 108.7 119.2 43.3 724.0
--------------------------------------------------------------------
POLICY BENEFITS,
CLAIMS AND
OPERATING EXPENSES
Policy benefits,
claims and
losses 53.3 22.0 79.0 95.0 57.1 7.9 314.3
Policy acquisition
expenses 31.6 4.2 21.7 2.7 2.3 0.0 62.5
---------------------------------------------------------------------
Total policy
benefits,
claims, and
policy
acquisition
expenses 84.9 26.2 100.7 97.7 59.4 7.9 376.8
--------------------------------------------------------------------
Operating income
before other
operating
expenses $148.7 $ 41.3 $ 51.0 $ 11.0 $ 59.8 $ 35.4 347.2
============================================================
Other operating
expenses 178.2 <FN3>
-------
Net operating
income before
taxes $ 169.0
========
<FN>
<FN1>
Includes defined benefit and defined contribution plan products and services.
<FN2>
Includes non-insurance activities and products in runoff (e.g.YRT,DI).
<FN3>
Includes other operating expenses from the Closed Block of approximately
$0.7 million for the year ended December 31, 1998.
</FN>
</TABLE>
Page 21
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA FINANCIAL SERVICES
PREMIUMS, DEPOSITS AND OTHER INCOME
<TABLE>
<CAPTION>
Quarter ended Year ended
December 31 December 31
% %
(In millions) 1999 1998 Change 1999 1998 Change
<S> <C> <C> <C> <C> <C> <C>
STATUTORY PREMIUMS AND
DEPOSITS
SUMMARY
Insurance
Traditional life $ 14.9 $ 10.4 43.3 $ 77.4 $ 55.9 38.5
Universal life 17.7 3.8 N/M 71.8 23.6 N/M
Variable universal life 52.2 42.9 21.7 187.0 158.7 17.8
Individual health 0.1 0.1 0.0 0.3 0.6 (50.0)
Group variable
universal life 64.3 50.1 28.3 94.9 73.3 29.5
--------------------------------------------------
Total insurance 149.2 107.3 39.0 431.4 312.1 38.2
-------------------------------------------------
Annuities
Separate account
annuities 483.2 463.6 4.2 1,922.2 2,583.6 (25.6)
General account
annuities 166.9 239.7 (30.4) 830.2 622.2 33.4
Retirement investment
accounts 2.9 3.7 (21.6) 16.4 20.1 (18.4)
--------------------------------------------------
Total individual
annuities 653.0 707.0 (7.6) 2,768.8 3,225.9 (14.2)
Group annuities 107.1 161.9 (33.8) 409.3 563.9 (27.4)
--------------------------------------------------
Total annuities 760.1 868.9 (12.5) 3,178.1 3,789.8 (16.1)
--------------------------------------------------
Total premiums and
deposits $909.3 $976.2 (6.9) $3,609.5 $4,101.9 (12.0)
==================================================
COMPONENTS
Insurance
Traditional life
New business premium $ 0.8 $ 0.8 0.0 $ 11.9 $ 12.6 (5.6)
Renewal premium and
deposits 14.1 9.6 46.9 65.5 43.3 51.3
--------------------------------------------------
$ 14.9 $ 10.4 43.3 $ 77.4 $ 55.9 38.5
==================================================
Universal life
New business premium $ 0.1 $ 0.0 N/M $ 0.5 $ 0.2 N/M
Renewal premium and
deposits 17.6 3.8 N/M 71.3 23.4 N/M
--------------------------------------------------
$ 17.7 $ 3.8 N/M $ 71.8 $ 23.6 N/M
==================================================
Variable universal life
New business premium $ 28.0 $ 21.4 30.8 $ 97.7 $ 74.8 30.6
Renewal premium and
deposits 24.2 21.5 12.6 89.3 83.9 6.4
--------------------------------------------------
$ 52.2 $ 42.9 21.7 $ 187.0 $ 158.7 17.8
==================================================
Individual annuities by
distribution channel
Agency $206.1 $189.3 8.9 $ 930.1 $ 871.3 6.7
Select 175.3 124.3 41.0 633.1 609.8 3.8
Kemper 171.3 199.3 (14.0) 637.3 884.1 (27.9)
Pioneer 59.0 90.8 (35.0) 317.5 359.0 (11.6)
Delaware 37.3 94.0 (60.3) 219.6 469.3 (53.2)
Fulcrum 1.1 5.6 (80.4) 14.8 12.3 20.3
Retirement investment
accounts 2.9 3.7 (21.6) 16.4 20.1 (18.4)
-------------------------------------------------
$653.0 $707.0 (7.6) $2,768.8 $3,225.9 (14.2)
=================================================
GAAP OTHER INCOME
(Excluding Closed Block)
Investment management
fees $ 10.3 $ 7.8 32.1 $ 39.3 $ 31.0 26.8
Brokerage income 7.8 5.4 44.4 24.3 19.3 25.9
Other 9.7 5.6 73.2 24.1 12.6 91.3
-------------------------------------------------
$ 27.8 $ 18.8 47.9 $ 87.7 $ 62.9 39.4
=================================================
</TABLE>
Page 22
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA FINANCIAL SERVICES
FUTURE POLICY BENEFITS AND ACCOUNT BALANCES
<TABLE>
<CAPTION>
December 31 December 31
(In millions) 1999 1998 % Change
<S> <C> <C> <C>
GENERAL ACCOUNT RESERVES
Insurance
Traditional life, excluding
Closed Block $ 37.7 $ 36.3 3.9
Universal life 816.1 845.3 (3.5)
Variable universal life 136.3 109.8 24.1
Individual health 273.0 267.8 1.9
Group variable universal life 10.0 3.1 N/M
----------------------------------
Total insurance 1,273.1 1,262.3 0.1
----------------------------------
Annuities
Individual annuities 1,218.9 1,226.9 (0.7)
Group annuities 870.9 1,000.8 (13.0)
----------------------------------
Total annuities 2,089.8 2,227.7 (6.2)
----------------------------------
Total general account reserves $ 3,362.9 $ 3,490.0 (3.6)
==================================
SEPARATE ACCOUNT LIABILITIES
Variable individual life $ 1,244.8 $ 921.8 35.0
Variable individual annuities 13,872.6 10,570.9 31.2
----------------------------------
Total individual 15,117.4 11,492.7 31.5
Group variable universal life 260.5 161.2 61.6
Group annuities 2,251.0 2,037.6 10.5
----------------------------------
Total group 2,511.5 2,198.8 14.2
----------------------------------
Total separate account liabilities $17,628.9 $13,691.5 28.8
==================================
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31
(In millions) 1999 1998 % Change
<S> <C> <C> <C>
UNIVERSAL LIFE
Policyholder deposits, beginning
of period $ 772.3 $ 810.9 (4.8)
Withdrawals during the period (56.3) (64.6) (12.8)
Net premiums and deposits during
the period 23.0 23.6 (2.5)
Interest credited during the period 36.6 41.4 (11.6)
Insurance and administrative charges (65.5) (68.1) (3.8)
Reinsurance adjustment 25.1 29.1 (13.7)
---------------------------------
Outstanding deposits, end of period 735.2 772.3 (4.8)
Other universal life benefit
liabilities 80.9 73.0 10.8
---------------------------------
Total universal life policy benefit
balances $ 816.1 $ 845.3 (3.5)
=================================
</TABLE>
Page 23
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA ASSET MANAGEMENT
CONDENSED INCOME STATEMENTS AND SUPPLEMENTAL INFORMATION
<TABLE>
<CAPTION>
Quarter ended Year ended
December 31 December 31
% %
(In millions) 1999 1998 Change 1999 1998 Change
<S> <C> <C> <C> <C> <C> <C>
INTEREST MARGINS ON GICS
Net investment income $30.9 $31.9 (3.1) $ 137.9 $ 111.3 23.9
Interest credited 26.9 26.1 3.1 118.6 89.3 32.8
----------------------------------------------
Net interest margin 4.0 5.8 (31.0) 19.3 22.0 (12.3)
----------------------------------------------
OTHER INCOME AND EXPENSES
External fees and other
income 1.8 1.7 5.9 6.2 4.0 55.0
Internal fees and other
income 1.5 1.5 0.0 6.4 6.4 0.0
Other operating expenses 2.0 2.3 (13.0) 8.4 8.7 (3.4)
----------------------------------------------
Net operating income before
taxes 5.3 6.7 (20.9) 23.5 23.7 (0.8)
Net realized investment
(losses) gains (9.8) 11.0 N/M (23.3) 10.0 N/M
----------------------------------------------
Net income before taxes $(4.5) $17.7 N/M $ 0.2 $ 33.7 (99.4)
==============================================
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31
(In millions) 1999 1998 % Change
<S> <C> <C> <C>
GIC DEPOSITS
Outstanding GIC deposits, beginning of period $ 1,791.8 $ 985.2 81.9
Withdrawals during the period (1,580.1) (339.4) N/M
Deposits during the period <FN1> 1,036.3 1,056.7 (1.9)
Interest credited during the period 118.6 89.3 32.8
----------------------------
Outstanding GIC deposits, end of period $ 1,366.6 $ 1,791.8 (23.7)
============================
<FN>
<FN1>
Includes $3.0 and $0.3 million of traditional GIC deposits for the years
ended December 31, 1999 and 1998, respectively.
</FN>
</TABLE>
<TABLE>
<CAPTION>
December 31
(In millions) 1999 1998
<S> <C> <C>
GIC SCHEDULED MATURITIES
1999 $ 0.0 $ 337.5
2000 83.1 83.7
2001 121.4 25.8
2002 33.3 31.9
2003+ 105.0 0.0
----------------------
342.8<FN1> 478.9
Floating rate funding agreement balances 1,023.8 1,312.9
----------------------
$1,366.6 $1,791.8
======================
<FN>
<FN1>
Includes $198.4 million of fixed rate funding agreement balances for the
year ended December 31, 1999.
</FN>
</TABLE>
Page 24
<PAGE>
ALLMERICA FINANCIAL CORPORATION
CORPORATE
CONDENSED INCOME STATEMENTS
<TABLE>
<CAPTION>
Quarter ended December 31 Year ended December 31
(In millions) 1999 1998 % Change 1999 1998 % Change
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Net investment
income $ 1.1 $ 3.0 (63.3) $ 6.0 $ 11.9 (49.6)
Other income 0.0 0.0 0.0 0.0 1.0 N/M
-------------------------------------------------------
Total operating
revenue 1.1 3.0 (63.3) 6.0 12.9 (53.5)
OPERATING EXPENSES
Interest expense 3.9 4.6 (15.2) 15.4 16.0 (3.8)
Other operating
expenses 13.3 13.7 (2.9) 49.9 47.8 4.4
-------------------------------------------------------
Total operating
expenses 17.2 18.3 (6.0) 65.3 63.8 2.4
-------------------------------------------------------
Net operating loss
before taxes and
minority interest (16.1) (15.3) 5.2 (59.3) (50.9) 16.5
Net realized
investment
(losses) gains (0.8) 0.4 N/M (3.2) 0.8 N/M
-------------------------------------------------------
Net loss before
taxes and minority
interest $(16.9) $(14.9) 13.4 $(62.5) $(50.1) 24.8
=======================================================
</TABLE>
Page 25
<PAGE>
ALLMERICA FINANCIAL CORPORATION
NET INVESTMENT INCOME, INCLUDING CLOSED BLOCK
<TABLE>
<CAPTION>
(In millions, except yields) Year ended December 31, 1999
Allmerica Allmerica
Risk Financial Asset
Management Yield Services Yield Management Yield Corporate Yield Total Yield
<FN1> <FN2>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed
maturities $217.0 6.65% $221.6 8.20% $114.2 6.64% $ 2.4 6.23% $555.2 7.18%
Equity
securities 1.4 2.69% 1.0 1.41% 0.0 0.00% 0.0 0.00% 2.4 1.97%
Mortgages 0.0 0.00% 41.7 8.37% 14.4 8.31% 0.0 0.00% 56.1 8.36%
All other 7.3 0.00% 49.3 0.00% 12.2 0.00% 2.6 0.00% 71.4 0.00%
Investment
expenses (4.3) 0.00% (8.8) 0.00% (2.6) 0.00% 0.0 0.00% (15.7)0.00%
------------------------------------------------------------------------------------
Total $221.4 6.40% $304.8 7.39% $138.2 7.16% $ 5.0 4.43% $669.4 6.95%
=====================================================================================
<FN>
<FN1> Includes purchase accounting adjustments of $4.6 million for the year ended December 31, 1999.
<FN2> Includes corporate eliminations of $1.0 million for the year ended December 31, 1999.
</FN>
</TABLE>
<TABLE>
<CAPTION>
(In millions, except yields) Year ended December 31, 1998
Allmerica Allmerica
Risk Financial Asset
Management Yield Services Yield Management Yield Corporate Yield Total Yield
<FN1> <FN2>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed
maturities $223.0 6.65% $232.0 8.18% $ 84.7 6.82% $ 8.3 6.95% $548.0 7.25%
Equity
securities 6.6 1.76% 0.6 0.88% 0.0 0.00% 0.0 0.00% 7.2 1.61%
Mortgages 0.0 0.00% 49.8 9.72% 17.9 10.8% 0.0 0.00% 67.7 9.98%
All other 4.8 0.00% 32.4 0.00% 10.8 0.00% 1.8 0.00% 49.8 0.00%
Investment
expenses (4.6) 0.00% (8.4) 0.00% (2.0) 0.00% 0.0 0.00% (15.0)0.00%
-----------------------------------------------------------------------------------
Total $229.8 6.02% $306.4 7.56% $111.4 7.67% $10.1 6.02% $657.7 6.93%
====================================================================================
<FN>
<FN1> Includes purchase accounting adjustments of $4.0 million for the year ended December 31, 1998.
<FN2> Includes corporate eliminations of $1.8 million for the year ended December 31, 1998.
</FN>
</TABLE>
Page 26
<PAGE>
ALLMERICA FINANCIAL CORPORATION
HISTORICAL FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(In millions, except
per share data) 1999 Q4 99 Q3 99 Q2 99 Q1 99 1998 Q4 98 Q3 98 Q2 98 Q1 98
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET OPERATING
INCOME BEFORE
TAXES AND MINORITY
INTEREST <FN1>
Risk
Management $ 199.6 $ 65.0 $ 49.5 $ 55.3 $ 29.8 $ 149.6 $ 52.4 $ 24.6 $ 34.9 $ 37.7
---------------------------------------------------------------------------------------------------
Asset
Accumulation
Allmerica
Financial
Services 205.5 54.2 54.7 47.7 48.9 169.0 43.5 39.1 44.2 42.2
Allmerica Asset
Management 23.5 5.3 5.7 6.8 5.7 23.7 6.7 6.9 6.2 3.9
---------------------------------------------------------------------------------------------------
229.0 59.5 60.4 54.5 54.6 192.7 50.2 46.0 50.4 46.1
---------------------------------------------------------------------------------------------------
Corporate (59.3) (16.1) (13.7) (13.5) (16.0) (50.9) (15.3) (10.6) (12.7) (12.3)
---------------------------------------------------------------------------------------------------
Total net
operating income
before federal
income taxes and
minority interest 369.3 108.4 96.2 96.3 68.4 291.4 87.3 60.0 72.6 71.5
Federal income
taxes on
operating income (72.4) (23.6) (16.4) (19.3) (13.1) (53.1) (13.8) (10.7) (12.2) (16.4)
Minority interest:
Distributions on
mandatorily
redeemable
preferred
securities of a
subsidiary
trust (16.0) (4.0) (4.0) (4.0) (4.0) (16.0) (4.0) (4.0) (4.0) (4.0)
Equity in earnings 0.0 0.0 0.0 0.0 0.0 (9.8) (2.4) (1.9) (1.7) (3.8)
---------------------------------------------------------------------------------------------------
Consolidated net
operating income $ 280.9 $ 80.8 $ 75.8 $ 73.0 $ 51.3 $ 212.5 $ 67.1 $ 43.4 $ 54.7 $ 47.3
==================================================================================================
INCOME FROM
CONTINUING
OPERATIONS $ 345.1 $ 68.4 $ 59.1 $ 66.8 $ 150.8 $ 214.7 $ 67.7 $ 24.3 $ 59.2 $ 63.5
==================================================================================================
NET INCOME $ 295.8 $ 68.4 $ 13.1 $ 60.2 $ 154.1 $ 201.2 $ 65.9 $ 8.2 $ 60.3 $ 66.8
==================================================================================================
PER SHARE DATA
(DILUTED)
NET OPERATING
INCOME $ 5.06 $ 1.48 $ 1.3 $ 1.32 $ 0.89 $ 3.52 $ 1.12 $ 0.71 $ 0.91 $ 0.78
INCOME FROM
CONTINUING
OPERATIONS $ 6.21 $ 1.25 $ 1.08 $ 1.21 $ 2.61 $ 3.56 $ 1.13 $ 0.40 $ 0.98 $ 1.05
NET INCOME $ 5.33 $ 1.25 $ 0.24 $ 1.09 $ 2.67 $ 3.33 $ 1.10 $ 0.13 $ 1.00 $ 1.11
DIVIDENDS $ 0.25 $ 0.00 $ 0.25 $ 0.00 $ 0.00 $ 0.15 $ 0.00 $ 0.05 $ 0.05 $ 0.05
WEIGHTED AVERAGE
SHARES OUTSTANDING
(DILUTED) 55.5 54.6 54.7 55.1 57.7 60.3 59.9 60.6 60.5 60.3
BALANCE SHEET
Total investments $ 7,888.7 $ 8,265.7 $ 9,043.7 $ 9,163.1 $ 9,057.6 $ 9,169.0 $ 9,274.0 $ 8,923.8
Separate account
asets $17,629.6 $15,102.1 $15,635.9 $14,329.4 $13,697.7 $11,424.9 $12,260.5 $11,425.4
Total assets $30,769.6 $29,080.0 $29,826.4 $28,461.2 $27,653.1 $25,233.5 $25,816.4 $24,511.8
Total shareholders'
equity $ 2,240.2 $ 2,213.2 $ 2,248.7 $ 2,387.5 $ 2,458.6 $ 2,480.3 $ 2,539.4 $ 2,468.8
Book value per
share $ 41.32 $ 40.86 $ 41.49 $ 42.30 $ 41.95 $ 41.02 $ 42.04 $ 40.94
Book value per
share,
excluding
SFAS No.115 $ 42.71 $ 41.76 $ 41.45 $ 40.97 $ 38.87 $ 38.08 $ 38.01 $ 37.07
<FN>
<FN1> Net operating income excludes net realized gains (losses) and other non-
operating items, net of taxes and minority interest.
</FN>
</TABLE>
PAGE 27
<PAGE>
ALLMERICA FINANCIAL CORPORATION
HISTORICAL FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(In millions, except
per share data) 1997 Q4 97 Q3 97 Q2 97 Q1 97 1996 Q4 96 Q3 96 Q2 96 Q1 96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET OPERATING
INCOME BEFORE
TAXES AND
MINORITY
INTEREST <FN1>
Risk
Management $ 174.2 $ 54.7 $ 36.1 $ 45.6 $ 37.8 $ 173.1 $ 43.6 $ 63.0 $ 40.0 $ 26.5
-------------------------------------------------------------------------------------------------
Asset
Accumulation
Allmerica
Financial
Services 134.6 35.0 37.8 32.0 29.8 106.8 28.2 27.4 28.0 23.2
Allmerica
Asset
Management 18.4 4.6 5.2 5.4 3.2 11.5 5.4 2.8 2.1 1.2
-------------------------------------------------------------------------------------------------
153.0 39.6 43.0 37.4 33.0 118.3 33.6 30.2 30.1 24.4
-------------------------------------------------------------------------------------------------
Corporate (48.0) (17.2) (11.8) (8.0) (11.0) (58.0) (21.8) (10.4) (11.5) (14.3)
-------------------------------------------------------------------------------------------------
Total net
operating income
before federal
income taxes and
minority interest 279.2 77.1 67.3 75.0 59.8 233.4 55.4 82.8 58.6 36.6
Federal income
taxes on
operating income (63.4) (16.7) (16.0) (18.9) (11.8) (50.8) (11.2) (21.5) (14.8) (3.3)
Minority interest:
Distributions
on mandatorily
redeemable
preferred
securities of
a subsidiary
trust (14.5) (4.0) (4.1) (4.0) (2.4) 0.0 0.0 0.0 0.0 0.0
Equity in earnings (37.0) (5.4) (0.5) (16.5) (14.6) (61.5) (14.9) (21.7) (13.3) (11.6)
-------------------------------------------------------------------------------------------------
Consolidated net
operating income $ 164.3 $ 51.0 $ 46.7 $ 35.6 $ 31.0 $ 121.1 $ 29.3 $ 39.6 $ 30.5 $ 21.7
=================================================================================================
INCOME FROM
CONTINUING
OPERATIONS $ 192.6 $ 89.6 $ 55.6 $ 33.9 $ 13.5 $ 164.4 $ 37.4 $ 43.6 $ 39.7 $ 43.7
================================================================================================
NET INCOME $ 209.2 $ 94.9 $ 60.7 $ 37.7 $ 15.9 $ 181.9 $ 45.3 $ 46.7 $ 42.6 $ 47.3
================================================================================================
PER SHARE DATA
(DILUTED)
NET OPERATING
INCOME $ 3.00 $ 0.85 $ 0.80 $ 0.71 $ 0.62 $ 2.41 $ 0.58 $ 0.79 $ 0.61 $ 0.43
INCOME FROM
CONTINUING
OPERATIONSCC $ 3.52 $ 1.49 $ 0.95 $ 0.67 $ 0.27 $ 3.29 $ 0.76 $ 0.87 $ 0.79 $ 0.87
NET INCOME $ 3.82 $ 1.58 $ 1.04 $ 0.75 $ 0.32 $ 3.63 $ 0.91 $ 0.93 $ 0.85 $ 0.94
DIVIDENDS $ 0.20 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.20 $ 0.05 $ 0.05 $ 0.05 $ 0.05
WEIGHTED AVERAGE
SHARES
OUTSTANDING
(DILUTED) 54.8 60.2 58.4 50.3 50.2 50.1 50.1 50.1 50.1 50.1
BALANCE SHEET
Total investments $ 8,700.7 $ 8,741.1 $ 8,808.4 $ 8,758.3 $ 8,993.4 $ 9,247.2 $ 9,439.6 $ 9,479.2
Separate account
assets $ 9,755.4 $ 9,233.6 $ 8,036.3 $ 6,705.8 $ 6,233.0 $ 5,586.8 $ 5,197.9 $ 4,761.6
Total assets $22,549.0 $21,967.2 $20,963.5 $19,625.6 $18,970.3 $18,728.5 $18,506.1 $18,162.7
Total shareholders'
equity $ 2,381.3 $ 2,263.4 $ 1,782.5 $ 1,672.0 $ 1,724.7 $ 1,633.0 $ 1,563.5 $ 1,555.9
Book value per
share $ 39.71 $ 37.74 $ 35.47 $ 33.35 $ 34.40 $ 32.57 $ 31.20 $ 31.03
Book value per
share,
excluding
SFAS
No.115 $ 36.08 $ 34.54 $ 32.66 $ 31.97 $ 31.78 $ 30.92 $ 30.04 $ 29.24
<FN>
<FN1> Net operating income excludes net realized gains (losses) and other non-
operating items, net of taxes and minority interest.
</FN>
</TABLE>
PAGE 28
<PAGE>
ALLMERICA FINANCIAL CORPORATION
HISTORICAL FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(In millions, except
per share data) 1995 Q4 95 Q3 95 Q2 95 Q1 95
<S> <C> <C> <C> <C> <C>
NET OPERATING INCOME BEFORE TAXES
AND MINORITY INTEREST <FN1>
Risk Management $ 212.0 $ 54.6 $ 58.0 $ 51.4 $ 48.0
------------------------------------------------
Asset Accumulation
Allmerica Financial Services 60.0 15.4 16.0 11.4 17.2
Allmerica Asset Management 12.2 3.5 2.5 3.8 2.4
------------------------------------------------
72.2 18.9 18.5 15.2 19.6
------------------------------------------------
Corporate (47.8) (15.4) (11.7) (9.6) (11.1)
------------------------------------------------
Total net operating income
before federal income taxes
and minority interest 236.4 58.1 64.8 57.0 56.5
Federal income taxes on
operating income (67.4) (20.2) (17.8) (14.1) (15.3)
Minority interest:
Distributions on mandatorily
redeemable preferred securities
of a subsidiary trust 0.0 0.0 0.0 0.0 0.0
Equity in earnings (69.2) (15.4) (19.4) (18.3) (16.1)
-----------------------------------------------
Consolidated net operating income $ 99.8 $ 22.5 $ 27.6 $ 24.6 $ 25.1
===============================================
INCOME FROM CONTINUING OPERATIONS $117.9 $ 34.2 $ 25.6 $ 24.2 $ 33.9
===============================================
NET INCOME $133.9 $ 40.7 $ 30.1 $ 26.4 $ 36.7
================================================
PER SHARE DATA
(DILUTED)
NET OPERATING INCOME $ 1.99 $ 0.45 $ 0.55 $ 0.49 $ 0.50
INCOME FROM CONTINUING OPERATIONS $ 2.35 $ 0.68 $ 0.51 $ 0.48 $ 0.68
NET INCOME $ 2.67 $ 0.81 $ 0.60 $ 0.53 $ 0.73
DIVIDENDS $ 0.05 $ 0.05 $ 0.00 $ 0.00 $ 0.00
WEIGHTED AVERAGE SHARES
OUTSTANDING (DILUTED) 50.1 50.1 50.1 50.1 50.1
BALANCE SHEET
Total investments $ 9,430.7 $ 9,898.1 $ 9,941.5 $ 0.0
Separate account assets $ 4,348.8 $ 4,076.7 $ 3,659.2 $ 0.0
Total assets $17,757.7 $17,163.8 $16,798.7 $ 0.0
Total shareholders' equity $ 1,574.2 $ 1,255.5 $ 1,230.1 $ 0.0
Book value per share $ 31.40 $ 25.04 $ 24.54 $ 0.0
Book value per share, excluding
SFAS No. 115 $ 28.35 $ 23.23 $ 22.63 $ 0.0
<FN>
<FN1> Net operating income excludes net realized gains (losses) and other non-
operating items, net of taxes and minority interest.
</FN>
</TABLE>
PAGE 29
<PAGE>
CORPORATE OFFICES AND PRINCIPAL SUBSIDIARIES
Allmerica Financial
440 Lincoln Street
Worcester, MA 01653
The Hanover Insurance Company
100 North Parkway
Worcester, MA 01605
Citizens Insurance Company of America
645 West Grand River
Howell, MI 48843
MARKET AND DIVIDEND INFORMATION
The following information shows trading activity for the Company for the
periods indicated:
<TABLE>
<CAPTION>
Quarter Ended 1999
Price Range
Dividends
High Low Per Share
<S> <C> <C> <C>
March 31 $57.88 $50.19 $0.00
June 30 $62.25 $54.50 $0.00
September 30 $58.44 $47.56 $0.25
December 31 $59.69 $46.50 $0.00
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended 1998
Price Range
Dividends
High Low Per Share
<S> <C> <C> <C>
March 31 $66.38 $42.31 $0.05
June 30 $72.13 $61.31 $0.05
September 30 $72.13 $57.31 $0.05
December 31 $57.88 $39.25 $0.00
</TABLE>
INDUSTRY RATINGS
A.M. Standard Duff &
Claims Paying Best & Poors Moody's Phelps
- -----------------------------------------------------------------------------
First Allmerica Financial
Life Insurance Company (a) A AA- A1 AA
- -----------------------------------------------------------------------------
Allmerica Financial Life
Insurance and Annuity Company (b) A AA- A1 AA
- -----------------------------------------------------------------------------
The Hanover Insurance Company A AA- A1 -
- -----------------------------------------------------------------------------
Citizens Insurance Company
of America A - - -
(a) Formerly State Mutual Life Assurance Company of America
(b) Formerly SMA Life Assurance Company
Standard Duff &
Debt Ratings & Poors Moody's Phelps
- -----------------------------------------------------------------------------
Allmerica Financial Corporation
Senior Debt A- A2 A+
- -----------------------------------------------------------------------------
Allmerica Financial Corporation
Capital Securities BBB A2 -
- -----------------------------------------------------------------------------
Allmerica Financial Corporation
Short Term Debt A1+ P1 -
- -----------------------------------------------------------------------------
First Allmerica Financial
Life Insurance Company
Short Term Debt A1+ P1 -
- -----------------------------------------------------------------------------
TRANSFER AGENT
First Chicago Trust Company of New York
A Division of EquiServe, LP
525 Washington Boulevard
Jersey City, NJ 01303-2512
1-800-317-4454
COMMON STOCK
Common stock of Allmerica Financial Corporation is traded on the New York
Stock Exchange
under the symbol "AFC".
INQUIRIES
Henry P. St. Cyr, CFA
Vice President, Investor Relations
(508) 855-2959
[email protected]
William J. Steglitz, CPA
Manager, Investor Relations
(508) 855-3883
[email protected]
INVESTOR INFORMATION LINE
Dial 1-800-407-5222 to receive additional printed information, fax-on-demand
services or other prerecorded messages.
Please visit our internet site at www.Allmerica.com
<PAGE>
