FORM 11-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31,1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from: ____________ to ____________
Commission file number: 1-13754
THE ALLMERICA FINANCIAL EMPLOYEES'
401(K) MATCHED SAVINGS PLAN
(Full title of the plan)
ALLMERICA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-3263626
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
440 Lincoln Street, Worcester, Massachusetts 01653
(Address of principal executive offices)
(Zip Code)
(508) 855-1000
(Registrant's telephone number, including area code)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
<PAGE>
The Allmerica Financial
Employees' 401(k) Matched
Savings Plan
Financial Statements
and Additional Information
December 31, 1999 and 1998
<PAGE>
The Allmerica Financial Employees' 401(k) Matched Savings Plan
December 31, 1999 and 1998
TABLE OF CONTENTS
Report of Independent Accountants 1
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
Additional Information*
Schedule H - Schedule of Assets Held for Investment Purposes 9
* Other schedules required by the Department of Labor Rules and Regulations
on reporting and disclosure under the Employee Retirement Income Security
Act of 1974, as amended, have been omitted because they are not
applicable.
<PAGE>
Report of Independent Accountants
To the Participants and Administrator of
The Allmerica Financial Employees'
401(k) Matched Savings Plan
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available
for benefits of The Allmerica Financial Employees' 401(k) Matched Savings
Plan (the "Plan") at December 31, 1999 and 1998, and the changes in net
assets available for benefits for the years then ended, in conformity with
accounting principles generally accepted in the United States. These
financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States, which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets
held for investment purposes is presented for the purpose of additional
analysis and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 (ERISA). This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
June 23, 2000
<PAGE>
The Allmerica Financial Employees' 401(k) Matched Savings Plan
Statements of Net Assets Available for Benefits
At December 31,
[CAPTION]
<TABLE>
1999 1998
----------- ------------
<S> <C> <C>
Assets
Investments with First Allmerica Financial
Life Insurance Company:
Investments, at fair value:
Separate Investment Accounts:
Growth Stock Fund $101,038,030 * $ 79,225,504
Indexed Stock Fund 74,632,640 * 60,362,381
Balanced Fund 24,228,468 * 27,882,238
Select Aggressive Growth Fund 23,804,002 * 16,349,548
Select Growth Fund 12,907,004 5,620,251
Select International Equity Fund 12,547,824 9,188,256
Diversified Bond Fund 10,833,023 11,848,424
Money Market Fund 8,689,519 6,392,558
Government Securities Fund 2,822,469 2,869,685
Select Capital Appreciation Fund 2,480,330 888,109
----------- -----------
273,983,309 220,626,954
Investments, at contract value:
Fixed Interest Fund 125,348,751 * 119,031,272
Participant Loans 10,826,506 10,000,945
Other 474,497 458,464
----------- -----------
410,633,063 350,117,635
Investments with Allmerica Trust
Company, N.A.:
Allmerica Financial Corporation
Stock Fund, at fair value 50,707,870 * 58,510,974
----------- -----------
Net assets available for benefits $461,340,933 $408,628,609
=========== ===========
* Amount represents five percent or more of net assets available for
benefits at December 31, 1999.
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
The Allmerica Financial Employees' 401(k) Matched Savings Plan
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31,
[CAPTION]
<TABLE>
1999 1998
------------- -------------
<S> <C> <C>
Investment income:
Net appreciation (depreciation) of:
Separate Investment Accounts $ 49,369,252 $ 34,632,676
Allmerica Financial Corporation
Stock Fund (2,279,898) 8,030,802
Interest and dividend income 8,403,436 7,895,949
------------ ------------
55,492,790 50,559,427
------------ ------------
Contributions:
Employer contributions 5,837,379 5,617,912
Employee contributions 20,717,873 18,548,531
------------ ------------
26,555,252 24,166,443
------------ ------------
Total additions 82,048,042 74,725,870
------------ ------------
Benefit payments (29,356,085) (27,431,367)
Loan fees - (71,469)
Purchase of life insurance and
annuity contracts 20,367 20,398
------------ ------------
Total deductions (29,335,718) (27,482,438)
------------ ------------
Net increase during year 52,712,324 47,243,432
Net assets available for benefits,
beginning of year 408,628,609 361,385,177
------------ ------------
Net assets available for benefits,
end of year $461,340,933 $408,628,609
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
The Allmerica Financial Employees' 401(k) Matched Savings Plan
Notes to Financial Statements
NOTE 1 - Description of plan
The following description of The Allmerica Financial Employees' 401(k)
Matched Savings Plan ("the Plan") is provided for general informational
purposes only. More complete information is provided in the Summary Plan
Description, which is available from the Plan Administrator.
General
The Plan is a defined contribution plan for eligible employees of First
Allmerica Financial Life Insurance Company ("FAFLIC," "the Sponsor," or
"Company"), a wholly-owned subsidiary of Allmerica Financial Corporation
("AFC").
The Plan is administered by the Sponsor ("the Plan Administrator") and is
subject to the provisions of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). The Trustee of the Plan is Investors Bank
and Trust Company. The Plan's assets are held by the Sponsor and
Allmerica Trust Company, N.A., a related party.
On January 1, 1999, the Plan changed its recordkeeper from Allmerica
Financial Services to Hewitt Associates LLC.
Eligibility
Employees are eligible for participation in the Plan on the first day of
employment with the Company, as defined by the Plan document.
Employer contributions
The Plan has a 401(k) match provision. Employees are eligible to receive
matching contributions in the Plan on the first day of the calendar month
following completion of one year of service, as defined by the Plan
document. Under this provision, the amount of the match is determined by
Company performance at the discretion of the Sponsor's Board of Directors
and is announced at the beginning of each year. Employer contributions are
100% vested to the participant immediately upon receipt. In 1999 and 1998,
the matching contribution rate was 50 cents on every dollar up to the first
6% of compensation contributed to the Plan by a participant. These
contributions are allocated to the same investment vehicles as the employee
contributions. In addition, the Board of Directors may require that all
matching contributions be made to the AFC Stock Fund. However, this
restriction was not imposed during the 1999 or 1998 plan year.
4
<PAGE>
The Allmerica Financial Employees' 401(k) Matched Savings Plan
Notes to Financial Statements
NOTE 1 - Description of plan (continued)
Reallocated forfeitures
Prior to 1995, employer profit sharing contributions were subject to a 5-
year vesting schedule. Forfeitures of these employer contributions related
to nonvested terminated employees are accumulated until reallocated to
eligible participants of the Plan at the Plan Administrator's discretion.
Upon such election, previously forfeited amounts are used to offset employer-
matching contributions in the current year. In 1999 and 1998, no such
amounts were utilized. During 1999 and 1998, nonvested amounts forfeited to
the Plan were $511 and $2,130, respectively, and relate to contributions
made prior to 1995.
Participant accounts
Active participants in the Plan are eligible to make 401(k) contributions
through the use of a salary reduction plan up to a maximum of $10,000 in
1999 and 1998.
As directed by participant election, all contributions may be invested in
the Fixed Fund, the Separate Investment Accounts of the Sponsor, or the AFC
Stock Fund held with Allmerica Trust Company, N. A..
All investment income is reinvested in the same investment vehicle and is
credited to the respective participant account.
Participant loans
Loans made to active participants are secured by the vested portion of the
participant's account up to the limit as defined in the Plan document.
Loans vary in duration, depending upon purpose, and are at an interest rate
determined by the Plan Administrator. A participant is limited to a maximum
of two loans outstanding at any one time from all combined plans of the
Company. Loan fees are no longer charged to employees as of January 1, 1999.
During 1998, employees were charged a loan origination fee based on the
duration of the loan ($30 per year up to a maximum of $120) which was paid
to the Sponsor. Interest income in the Separate Investment Accounts
primarily reflects interest on participant loans. Included in interest
income in the Fixed Fund is interest earned on participant loans of $230,528
and $278,855 in 1999 and 1998, respectively. Included in interest income in
the AFC Stock Fund is interest earned on participant loans of $52,129 and
$41,555 in 1999 and 1998, respectively.
Distributions and vesting provisions
Vested account balances become payable upon retirement, death, or separation
from service (including disability) as defined in the Plan document.
5
<PAGE>
The Allmerica Financial Employees' 401(k) Matched Savings Plan
Notes to Financial Statements
NOTE 1 - Description of plan (continued)
A participant's account balance becomes 100% vested upon his or her death,
or becoming totally and permanently disabled or upon attaining normal
retirement age (age 65). In addition, a participant's 401(k) account,
including the employer matching contribution, the employer profit sharing
contribution equal to 2% of participant earnings (contributed for plan
years 1994 and prior), the rollover account, the after-tax voluntary
contribution account and the tax deductible voluntary contribution account
are 100% vested. The employer profit sharing contributions (contributed for
the plan years 1994 and prior), other than the 2% allocated to the 401(k)
account become vested as follows:
[CAPTION]
<TABLE>
Vested Percentage of
Completed Years of Service Regular Account Balance
---------------------------- -----------------------
<S> <C>
1 0%
2 25%
3 50%
4 75%
5 100%
</TABLE>
The amounts vested at December 31, 1999 and 1998 were $450,039,930 and
$396,673,120, respectively.
Payments from the fund are subject to limitations and requirements
specified in the Plan document.
NOTE 2 - Significant accounting policies
Significant accounting and reporting policies followed by the Plan are
summarized as follows:
Basis of presentation
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
6
<PAGE>
The Allmerica Financial Employees' 401(k) Matched Savings Plan
Notes to Financial Statements
NOTE 2 - Significant accounting policies (continued)
Valuation of investments
The Fixed Fund is held in the Sponsor's general account and provides for
guaranteed rates of interest reset annually. The credited interest rate
was 6.00% for monies invested in 1999 and 1998.
The investment contracts held by the Fixed Fund of the Plan are fully
benefit-responsive and are therefore exempt from application under the
provisions of Statement of Position 94-4 "Reporting Investment Contracts
Held by Health and Welfare Benefit Plans and Defined Contribution Plans".
As such, these investments are recorded at contract value, which
approximates fair value at December 31, 1999 and 1998.
The Separate Investment Accounts are pooled investment accounts
established as funding vehicles for qualified corporate retirement
programs administered by the Sponsor. Separate Investment Account funds
are segregated into accounts with specific investment objectives.
Investments in Separate Investment Accounts are stated at current value
based on the market value of the underlying securities as determined by
the Sponsor, primarily through the use of quoted prices. The investment
returns of the Separate Investment Accounts of the Sponsor were as
follows:
[CAPTION]
<TABLE>
Year Ended Year Ended
Separate Investment Account December 31, 1999 December 31, 1998
--------------------------- ----------------- -----------------
<S> <C> <C>
Growth Stock 29.19 % 19.49%
Diversified Bond (0.21)% 8.43%
Money Market 5.43 % 5.81%
Indexed Stock 20.91 % 29.01%
Government Securities 0.80 % 8.46%
Balanced (0.19)% 9.29%
Select Aggressive Growth 39.94 % 11.59%
Select International Equity 33.01 % 17.67%
Select Capital Appreciation 26.61 % 15.07%
Select Growth Fund 30.89 % 36.63%
</TABLE>
Due to participant-directed investment activity, actual investment returns
experienced by the Plan may differ from those of the Sponsor's Separate
Investment Accounts.
The AFC Stock Fund is a collective trust established by Allmerica Trust
Company, N.A. (a wholly-owned subsidiary of AFC). The AFC Stock Fund is
stated at fair value as determined by quoted market prices of both AFC
common stock and cash equivalents held in the Fund. The investment return
for 1999 and 1998 was (4.52)% and 17.27%, respectively.
Purchases and sales of securities are accounted for as of the trade date.
7
<PAGE>
The Allmerica Financial Employees' 401(k) Matched Savings Plan
Notes to Financial Statements
NOTE 2 - Significant accounting policies (continued)
Other assets
Other assets represent the value of individual annuities purchased from the
Sponsor and the annual interest earned plus the cash surrender value of life
insurance contracts held within the Plan.
Administrative expenses
The Sponsor paid all of the expenses incurred in the administration of the
Plan.
NOTE 3 - Federal income taxes
The Internal Revenue Service has determined and informed the Sponsor by a
letter dated November 9, 1995, that the Plan is qualified and the trust
established under the Plan is tax exempt under the appropriate sections of
the Internal Revenue Code. The Plan has been amended since receiving the
determination letter, however, the Plan Administrator believes that the Plan
is designed and is currently being operated in compliance with the
applicable provisions of the Internal Revenue Code. Therefore, no provision
for income tax is required.
By a letter dated November 20, 1997, the Department of Labor (the
"Department") notified the Company, that as a result of an examination of
the Plan, it had concluded that the Plan might have violated several
provisions of ERISA. Without admitting any liability, FAFLIC and the
Department have reached a settlement which did not have a significant
impact to the Plan or the Sponsor.
NOTE 4 - Plan termination
Although the Sponsor has not expressed any intent to terminate the Plan or
discontinue contributions, it may do so at any time. Should the Plan
terminate or discontinue contributions, the Plan provides that each
participant's interest in the Plan's assets as of the termination date shall
become 100% vested and nonforfeitable and be either payable to the
participant or applied to purchase a nonforfeitable retirement annuity at
the participant's option.
NOTE 5 - Significant transactions
On October 6, 1999, Allmerica Financial Corporation entered into an
agreement with Great-West Life and Annuity Insurance Company of Denver
(Great-West), which provides for the sale of the Company's group life and
health business effective March 1, 2000. As a result of this sale, a
certain number of Plan participants will become employees of Great-West.
The Plan assets of the affected participants will be transferred to a Great-
West 401(k) plan during 2000.
8
<PAGE>
The Allmerica Financial Employees' 401(k) Matched Savings Plan
Item 10, Form 5500 - Schedule of Assets Held for Investment Purposes
Schedule H
At December 31, 1999
[CAPTION]
<TABLE>
Identity of Description Shares or Contract or
Issue of Investments Units Current Value
---------------------- ----------------------- --------- -------------
<S> <C> <C> <C>
Investments with
First Allmerica
Financial Life
Insurance Company:**
Fixed Fund Interest rates at 6.00% $125,348,751*
Separate Investment
Accounts:
Growth Stock Fund Diversified portfolio
of common stocks 4,319,304 101,038,030*
Diversified Bond Fund Long term fixed income
securities 1,024,651 10,833,023
Money Market Fund Money market instruments
maturing in 1 year or
less 2,035,111 8,689,519
Indexed Stock Fund Common stocks which
comprise S&P 500
Composite Stock Index 8,638,537 74,632,640*
Government Securities Debt instruments and
Fund mortgage backed
securities guaranteed
by the U.S.
Government or its
affiliates 164,726 2,822,469
Balanced Fund Diversified portfolio
balanced in
traditional stocks,
bonds and cash
equivalents 968,988 24,228,468*
Select Aggressive Speculative portfolio
Growth Fund of equities of small to
medium-sized emerging
growth companies 812,127 23,804,002*
Select International Portfolio of equities
Equity Fund of established non-
U.S. companies
expected to benefit
from global economic
trends 539,455 12,547,824
Select Capital Portfolio of common
Appreciation Fund stocks of industries
and companies in a
favorable competitive
environment and
regulatory climate 154,568 2,480,330
</TABLE>
9
<PAGE>
The Allmerica Financial Employees' 401(k) Matched Savings Plan
Item 10, Form 5500 - Schedule of Assets Held for Investment Purposes
Schedule H (continued)
At December 31, 1999
[CAPTION]
<TABLE>
Identity of Description Shares or Contract or
Issue of Investments Units Current Value
---------------------- ----------------------- --------- -------------
<S> <C> <C> <C>
Investments with
First Allmerica
Financial Life
Insurance Company:**
(continued)
Select Growth Fund Diversified portfolio
comprised primarily
of common stocks 685,314 $ 12,907,004
Participant loans Interest rates from
7.0% to 11.0% 10,826,506
Other assets Individual annuities
and cash surrender
values purchased from
First Allmerica
Financial Life
Insurance Company ** 474,497
Investments with
Allmerica Trust
Company, N.A.:**
AFC Stock Fund Common stock traded
on the New York Stock
Exchange and cash
equivalents 908,336 50,707,870*
-----------
Total Investments $461,340,933
===========
** Represents party-in-interest.
* Amount represents five percent or more of net assets available for
benefits.
</TABLE>
10
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE ALLMERICA FINANCIAL EMPLOYEES'
401(K) MATCHED SAVINGS PLAN
----------------------------------
(Name of Plan)
/s/ Bruce C. Anderson
______________________________________________
Plan Administrator: First Allmerica Financial
Life Insurance Company by Bruce C. Anderson
Vice President
______________________________________________
June 23, 2000
11
<PAGE>
Exhibit Index
Exhibit 23.1 Consent of Independent Accountants
12
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-576) of Allmerica Financial Corporation of
our report dated June 23, 2000 relating to the financial statements of The
Allmerica Financial Employees' 401(k) Matched Savings Plan for the year
ended December 31, 1999, which appears in this Form 11-K.
/s/ PricewaterhouseCoopers
___________________________
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 23, 2000
13
<PAGE>
