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): July 27, 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 34 pages
Exhibit Index on page 4
Page 1
<PAGE>
Item 5. Other Events.
On July 27, 2000, Allmerica Financial Corporation announced its financial
results for second quarter 2000. 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 2000 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 attached press release, words such as "believes", "anticipated",
"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 Annual Report on Form 10-K for the
period ended December 31, 1999.
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; (xx) losses resulting from the
Company's participation in certain reinsurance pools; and (xxi) adverse
results of regulatory audits related to the Company's prior years' federal
income tax filings.
Item 7. Financial Statements and Exhibits.
Exhibit 99 Press Release dated July 27, 2000, announcing Allmerica
Financial Corporation second quarter 2000 financial results.
Exhibit 99.1 Allmerica Financial Corporation Second 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 and Chief Financial
Officer
Date: July 31, 2000
Page3
<PAGE>
Exhibit Index
Exhibit 99 Press Release dated July 27, 2000, announcing Allmerica
Financial Corporation second quarter 2000 financial results.
Exhibit 99.1 Allmerica Financial Corporation Second Quarter Statistical
Supplement.
Page 4
<PAGE>
Exhibit 99
ALLMERICA FINANCIAL CORPORATION REPORTS RECORD
SECOND QUARTER OPERATING EARNINGS OF $1.37 PER SHARE
WORCESTER, Mass., July 27, 2000 - Allmerica Financial Corporation
(NYSE: AFC) today reported record second quarter operating earnings from
continuing operations.
Second quarter highlights:
Net operating income per share from continuing operations was $1.37, or $74.5
million, an increase in earnings per share of 3.8 percent compared to $1.32
per share, or $73.0 million in 1999. Net operating income excludes net
realized investment gains and losses and other non-recurring gains and
charges, net of taxes.
Asset Accumulation pre-tax operating earnings were $60.1 million, up 10.3
percent from $54.5 million for the same period in 1999.
Variable annuity sales were $804.5 million, up from $765.6 million for the
second quarter of 1999.
Risk Management pre-tax operating earnings were $53.9 million, compared to
$55.3 million reported in the second quarter of 1999.
Net income was $47.6 million, or $0.88 per share compared to $60.2 million,
or $1.09 per share in 1999.
"Our increased operating earnings per share in the second quarter marked the
seventh consecutive quarter in which we have produced record comparative
operating earnings," said John F. O'Brien, president and chief executive
officer of Allmerica Financial Corporation. "We are encouraged by the
continued expansion of our Asset Accumulation segment, and expect our recent
investments in technology and distribution to produce new business
opportunities in the future. In Risk Management, we are pleased to report
premium growth across our key markets and further progress on the reduction
of our expense levels."
Allmerica Financial announced a new corporate-wide earnings enhancement
program, Project Ready!, designed to create additional processing and
workflow improvements and operating efficiencies throughout the entire
organization.
Project Ready! began in the late Fall of 1999. Allmerica has recently begun
the implementation phase of the project, which will continue throughout 2001.
In the second quarter, Allmerica Financial recorded a $13.2 million one-time
after-tax restructuring charge related to Project Ready!
"During the last nine months, we have identified over one thousand ideas
which will enhance our organizational efficiency through the redeployment
of our human and financial resources," said O'Brien. "Project Ready! is
a continuation of our ongoing efforts to achieve lower expense levels and
is one of the most significant initiatives undertaken since our
demutualization in 1995. We are confident this program will make
Allmerica a stronger, more competitive company."
Page5
<PAGE>
Segment Results
Allmerica Financial operates in two primary businesses: Asset Accumulation
and Risk Management. Asset Accumulation 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, with distribution
channels in Standard Markets, Sponsored Markets and Specialty Markets.
Asset Accumulation
Second quarter pre-tax operating earnings for the Asset Accumulation business
increased 10.3 percent to $60.1 million, from $54.5 million in 1999.
Allmerica Financial Services' pre-tax operating earnings increased to $55.5
million in the quarter, a 16.4 percent increase from $47.7 million in the
second quarter of 1999.
Allmerica Asset Management's pre-tax operating earnings were $4.6 million,
compared to $6.8 million in the same period of the prior year. This
decline is principally due to lower levels of spread-based assets in the
current quarter related to the previously reported redemptions of funding
agreement assets during the fourth quarter of 1999.
Asset Accumulation highlights:
Variable annuity sales were $804.5 million in the second quarter of 2000,
compared to $765.6 million in the second quarter of 1999.
Variable product assets increased to $18.5 billion at June 30, 2000, up 18.6
percent from June 30, 1999.
Variable product fees of $86.3 million were up 20.7 percent over the second
quarter of 1999. Increased fees are related to variable product asset
growth resulting from sales and stock market appreciation.
Variable life insurance sales were $28.6 million in the quarter, up 31.2
percent compared to the second quarter of 1999.
Risk Management
Risk Management pre-tax operating earnings were $53.9 million, compared to
$55.3 million for the second quarter of 1999.
Property and Casualty highlights:
Direct written premiums increased 10.0 percent in the second quarter, to
$601.1 million compared to $534.0 million in the second quarter of 1999.
Net earned premiums for the second quarter were $519.6 million, up 5.1
percent from $494.6 million in 1999.
The statutory expense ratio improved to 26.4 percent in the quarter,
compared to 28.7 percent for the second quarter of last year, 28.5 percent
for the full year in 1999.
Net pre-tax catastrophe losses were $17.8 million in this year's second
quarter compared to $9.2 million in the prior year.
Excluding catastrophe losses, the Company's loss ratio was 61.8 percent in
the second quarter versus 60.6 percent one year earlier, a result of a
decrease in favorable development on prior accident years partially offset
by improvements in the current accident year.
Page 6
<PAGE>
Corporate
Corporate segment net expenses were $12.2 million in the second quarter of
2000, compared to $13.5 million in 1999.
Investment Results
Net investment income was $146.6 million for the second quarter of 2000,
compared to $158.2 million in the same period in 1999. This decrease is
principally due to lower levels of spread-based assets in the funding
agreement business and lower invested assets in Allmerica Financial
Services due to the continued shift in assets from the general account to
the separate accounts.
Second quarter net realized investment losses were $20.4 million, compared
to $5.5 million of net realized investment losses in the second quarter of
1999. In 2000, the increased net realized losses related to the sale of
securities and impairments in the fixed income portfolios.
Balance Sheet
Shareholders' equity was $2.3 billion, or $42.98 per share at June 30, 2000,
compared to $2.2 billion, or $41.32 per share at December 31, 1999.
Excluding the impact of SFAS No. 115, book value was $44.17 per share at the
close of the second quarter, compared to $42.71 per share at December 31,
1999.
Total assets were $32.1 billion at June 30, 2000, up from $30.8 billion at
year-end 1999.
Interim information is unaudited.
Allmerica Financial Corporation is the holding company for a diversified
group of insurance and financial services companies headquartered in
Worcester, Mass.
Certain statements in this release may be considered to be forward-looking
statements as defined in the Private Securities Litigation Reform Act of
1995. Use of the words "believes", "anticipates", "expects" and similar
expressions is intended to identify forward-looking statements. The
Company cautions investors that any such forward-looking statements are not
guarantees of future performance, and actual results could differ
materially. Investors are directed to consider the risks and uncertainties in
our business that may affect future performance and that are discussed in
readily available documents, including the Company's annual report and
other documents filed by Allmerica with the Securities and Exchange
Commission. These uncertainties include the possibility of adverse
catastrophe experience and severe weather, adverse loss development and
adverse trends in mortality and morbidity, heightened competition, adverse
state and federal legislation or regulation, and various other factors.
CONTACTS: Investors Media
Henry P. St. Cyr Michael F. Buckley
(508) 855-2959 (508) 855-3099
E-mail:[email protected] E-mail:[email protected]
Page 7
<PAGE>
ALLMERICA FINANCIAL CORPORATION
<TABLE>
<CAPTION>
Quarter ended
June 30
(In millions, except per share data) 2000 1999
<S> <C> <C>
Net income $ 47.6 $ 60.2
Net income per share $ 0.88 $ 1.09
Weighted average shares 54.1 55.1
</TABLE>
The following is a reconciliation from net operating income to net income
per share:
<TABLE>
<CAPTION>
Quarter ended
June 30
PER SHARE DATA (DILUTED) <FN1> 2000 1999
<S> <C> <C>
Net operating income <FN2> $ 1.37 $ 1.32
Net realized losses on investments,
net of taxes and amortization (0.25) (0.11)
Restructuring costs (0.24) 0.00
-----------------
Income from continuing operations 0.88 1.21
Loss from operations of discontinued
business, net of taxes 0.00 (0.12)
-----------------
Net income $ 0.88 $ 1.09
=================
<FN>
<FN1>
Basic net income per share was $0.89 and $1.10 for the quarters ended June 30, 2000 and 1999 and $1.45 and $3.83 for the six months
ended June 30, 2000 and 1999, respectively.
<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>
All figures reported are unaudited and are in accordance with generally
accepted accounting principles.
Page 8
<PAGE>
ALLMERICA FINANCIAL CORPORATION
STATISTICAL SUPPLEMENT
TABLE OF CONTENTS
Financial Highlights 1
Consolidated Financial Statements
Income Statements 2
Balance Sheets 3
Segment Results
Income Statement Highlights 4
Historical Income Statement Highlights 5
Balance Sheet Highlights 6
Risk Management
Condensed Income Statements 7
Statutory Underwriting Profit/(Loss) by
Distribution Channel, Reconciled to GAAP 8-9
Selected Statutory Information by Distribution Channel 10-13
Asset Accumulation
Allmerica Financial Services
Condensed Income Statements 14
Operating Income by Product Line 15-16
Premiums, Deposits and Other Income 17
Future Policy Benefits and Account Balances 18
Allmerica Asset Management
Condensed Income Statements and Supplemental Information 19
Corporate
Condensed Income Statements 20
Investment Results
Net Investment Income, Including Closed Block 21
Historical Financial Highlights 22-24
Other Information
Corporate Information Inside back cover
Market and Dividend Information
Industry Ratings
<PAGE>
ALLMERICA FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(In millions, except per Quarter ended June 30 Six Months ended June 30
share data and ratios) 2000 1999 % Change 2000 1999 % Change
<S> <C> <C> <C> <C> <C> <C>
RECONCILIATION FROM NET OPERATING
INCOME TO NET INCOME
Net operating income <FN1> $ 74.5 $ 73.0 2.1 $140.9 $124.3 13.4
Net realized investment (losses)
gains, net of taxes
and amortization (13.7) (6.2) N/M (49.9) 93.3 N/M
Restructuring costs (13.2) 0.0 N/M (13.2) 0.0 N/M
------------------------ -------------------------
Income from continuing operations 47.6 66.8 (28.7) 77.8 217.6 (64.2)
Loss from operations of
discontinued business, net of taxes 0.0 (6.6) N/M 0.0 (3.3) N/M
------------------------ -------------------------
Net income $ 47.6 $ 60.2 (20.9) $ 77.8 $214.3 (63.7)
======================== ========================
PER SHARE DATA (DILUTED)
Net operating income <FN1> $ 1.37 $ 1.32 3.8 $ 2.60 $ 2.20 18.2
Net realized investment (losses)
gains, net of taxes and amortization (0.25) (0.11) N/M (0.93) 1.66 N/M
Restructuring costs (0.24) 0.00 N/M (0.24) 0.00 N/M
------------------------ --------------------------
Income from continuing operations 0.88 1.21 (27.3) 1.43 3.86 (63.0)
Loss from operations of
discontinued business, net of taxes 0.00 (0.12) N/M 0.00 (0.06) N/M
----------------------- --------------------------
Net income $ 0.88 $ 1.09 (19.3) $ 1.43 $ 3.80 (62.4)
======================== =========================
<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.
</FN>
</TABLE>
<TABLE>
<CAPTION>
June 30 December 31
2000 1999 % Change
<S> <C> <C> <C>
BALANCE SHEET
Shareholders' equity $ 2,288.6 $ 2,240.2 2.2
Statutory surplus:
Property and casualty insurance companies $ 1,002.8 $ 1,089.1 (7.9)
Life and health insurance companies $ 545.2 $ 590.1 (7.6)
Book value per share $ 42.98 $ 41.32 4.0
Book value per share, excluding
SFAS No. 115 $ 44.17 $ 42.71 3.4
Shares outstanding <FN2> 53.3 54.2
Stock price $ 52.38 $ 55.63 (5.8)
Price/book value per share 1.2 x 1.3 x (0.1) x
Debt/equity 8.7 % 8.9 % (0.2) pts
Debt/total capital 7.2 % 7.3 % (0.1) pts
Debt plus preferred securities of a
subsidiary trust/total capital 17.9 % 18.2 % (0.3) pts
<FN>
<FN2> Shares outstanding do not include common stock equivalents.
</FN>
</TABLE>
N/M - Not meaningful
Page 1
<PAGE>
ALLMERICA FINANCIAL CORPORATION
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
Quarter ended June 30 Six Months ended June 30
(In millions, except per share data) 2000 1999 % Change 2000 1999 % Change
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums $520.1 $494.7 5.1 $1,017.6 $ 953.0 6.8
Universal life and investment
product policy fees 102.7 88.6 16.0 205.2 171.5 19.7
Net investment income 146.6 158.2 (7.3) 288.9 312.5 (7.6)
Net realized investment (losses) gains (20.4) (5.5) N/M (67.2) 126.3 N/M
Other income 36.8 28.8 27.8 73.5 57.7 27.4
-------------------------- ----------------------------
Total revenues 785.8 764.8 2.7 1,518.0 1,621.0 (6.4)
-------------------------- ----------------------------
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and
loss adjustment expenses 462.2 440.2 5.0 915.6 883.4 3.6
Policy acquisition expenses 115.0 111.9 2.8 232.1 204.6 13.4
Other operating expenses 128.3 119.9 7.0 248.3 237.7 4.5
Restructuring costs 20.3 0.0 N/M 20.3 0.0 N/M
-------------------------- -----------------------------
Total benefits, losses and expenses 725.8 672.0 8.0 1,416.3 1,325.7 6.8
-------------------------- -----------------------------
Income from continuing operations
before federal income taxes 60.0 92.8 (35.4) 101.7 295.3 (65.6)
Federal income tax expense 8.4 22.0 (61.8) 15.9 69.7 (77.1)
-------------------------- -----------------------------
Income from continuing operations
before minority interest 51.6 70.8 (27.2) 85.8 225.6 (61.9)
-------------------------- -----------------------------
Minority interest:
Distributions on mandatorily
redeemable preferred securities
of a subsidiary trust (4.0) (4.0) 0.0 (8.0) (8.0) 0.0
-------------------------- -----------------------------
Income from continuing operations 47.6 66.8 (28.8) 77.8 217.6 (64.2)
Loss from operations of discontinued
business (less applicable income
taxes (benefit) of $(3.5) for the
quarter ended June 30, 1999 and
$(1.8) for the six months
ended June 30, 1999) 0.0 (6.6) N/M 0.0 (3.3) N/M
-------------------------- -----------------------------
Net income $ 47.6 $ 60.2 (20.9) $ 77.8 $ 214.3 (63.7)
========================== ============================
PER SHARE DATA (DILUTED)
Income from continuing operations $ 0.88 $ 1.21 (27.3) $ 1.43 $ 3.86 (63.0)
-------------------------- -----------------------------
Loss from operations of discontinued
business (less applicable income
taxes (benefit) of $(0.06) for the
quarter ended June 30, 1999 and
$(0.03) for the six months ended
June 30, 1999) 0.00 (0.12) N/M 0.00 (0.06) N/M
-------------------------- ----------------------------
Net income <FN1> $ 0.88 $ 1.09 (19.3) $ 1.43 $ 3.80 (62.4)
========================== ===========================
Dividends declared to shareholders $ 0.00 $ 0.00 $ 0.00 $ 0.00
=============== ===================
Weighted average shares outstanding 54.1 55.1 54.2 56.4
=============== ===================
<FN>
<FN1>
Basic net income per share was $0.89 and $1.10 for the quarters ended June 30, 2000 and 1999 and $1.45
and $3.83 for the six months ended June 30, 2000 and 1999, respectively.
</FN>
</TABLE>
Page 2
<PAGE>
ALLMERICA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31 %
(In millions, except per share data) 2000 1999 Change
<S> <C> <C> <C>
ASSETS
Investments:
Debt securities, at fair value
(Amortized cost of $7,540.5
and $7,095.0) $ 7,396.2 $ 6,933.8 6.7
Equity securities, at fair value
(Cost of $41.3 and $49.5) 69.1 83.2 (16.9)
Mortgage loans 500.3 521.2 (4.0)
Policy loans 181.1 170.5 6.2
Other long-term investments 174.7 180.0 (2.9)
-------------------------------
Total investments 8,321.4 7,888.7 5.5
-------------------------------
Cash and cash equivalents 327.2 442.2 (26.0)
Accrued investment income 131.5 134.7 (2.4)
Premiums, accounts and notes
receivable, net 628.8 583.5 7.8
Reinsurance receivable on paid and
unpaid losses, benefits and unearned
premiums 1,303.3 1,279.9 1.8
Deferred policy acquisition costs 1,505.9 1,386.8 8.6
Deferred federal income taxes 113.7 141.7 (19.8)
Other assets 510.8 510.2 0.1
Closed Block assets 768.5 772.3 (0.5)
Separate account assets 18,477.5 17,629.6 4.8
-------------------------------
Total assets $32,088.6 $30,769.6 4.3
===============================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits $ 2,685.1 $ 2,825.0 (5.0)
Outstanding claims, losses and loss
adjustment expenses 2,825.1 2,838.6 (0.5)
Unearned premiums 964.4 890.2 8.3
Contractholder deposit funds and other
policy liabilities 2,196.3 2,041.0 7.6
-------------------------------
Total policy liabilities and accruals 8,670.9 8,594.8 0.9
-------------------------------
Expenses and taxes payable 783.5 795.5 (1.5)
Reinsurance premiums payable 89.8 73.0 23.0
Trust instruments supported by
funding obligations 403.5 50.6 N/M
Short-term debt 51.4 45.0 14.2
Long-term debt 199.5 199.5 0.0
Closed Block liabilities 824.9 842.1 (2.0)
Separate account liabilities 18,476.5 17,628.9 4.8
-------------------------------
Total liabilities 29,500.0 28,229.4 4.5
-------------------------------
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 1,762.3 1,770.5 (0.5)
Accumulated other comprehensive income (63.7) (75.3) (15.4)
Retained earnings 960.0 882.2 8.8
Treasury stock at cost
(7.1 and 6.2 million shares) (370.6) (337.8) 9.7
-------------------------------
Total shareholders' equity 2,288.6 2,240.2 2.2
-------------------------------
Total liabilities and
shareholders' equity $32,088.6 $30,769.6 4.3
===============================
</TABLE>
Page 3
<PAGE>
ALLMERICA FINANCIAL CORPORATION
SEGMENT RESULTS
INCOME STATEMENT HIGHLIGHTS
<TABLE>
<CAPTION>
Quarter ended June 30 Six Months ended June 30
(In millions, except per share data) 2000 1999 % Change 2000 1999 % Change
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES <FN1>
Risk Management $ 579.4 $ 554.5 4.5 $ 1,136.9 $ 1,075.8 5.7
---------------------------- ------------------------------
Asset Accumulation
Allmerica Financial Services 195.0 174.8 11.6 387.6 343.0 13.0
Allmerica Asset Management 34.9 40.5 (13.8) 64.2 74.8 (14.2)
---------------------------- ------------------------------
229.9 215.3 6.8 451.8 417.8 8.1
---------------------------- ------------------------------
Corporate 1.7 2.4 (29.2) 2.7 3.6 (25.0)
Eliminations and other (1.5) (1.9) (21.1) (2.6) (2.5) 4.0
---------------------------- ------------------------------
Total operating revenues $ 809.5 $ 770.3 5.1 $ 1,588.8 $ 1,494.7 6.3
============================ =============================
NET OPERATING INCOME <FN2>
Risk Management $ 53.9 $ 55.3 (2.5) $ 97.0 $ 85.1 14.0
---------------------------- ------------------------------
Asset Accumulation
Allmerica Financial Services 55.5 47.7 16.4 109.9 96.6 13.8
Allmerica Asset Management 4.6 6.8 (32.4) 9.7 12.5 (22.4)
---------------------------- ------------------------------
60.1 54.5 10.3 119.6 109.1 9.6
---------------------------- ------------------------------
Corporate (12.2) (13.5) (9.6) (26.7) (29.5) (9.5)
---------------------------- ------------------------------
Total net operating income before
federal income taxes and minority
interest 101.8 96.3 5.7 189.9 164.7 15.3
Federal income taxes on operating
income (23.3) (19.3) 20.7 (41.0) (32.4) 26.5
Minority interest:
Distributions on mandatorily
redeemable preferred securities
of a subsidiary trust (4.0) (4.0) 0.0 (8.0) (8.0) 0.0
---------------------------- ------------------------------
Consolidated net operating income $ 74.5 $ 73.0 2.1 $ 140.9 $ 124.3 13.4
============================ ==============================
Consolidated net operating income
per share (diluted) $ 1.37 $ 1.32 3.8 $ 2.60 $ 2.20 18.2
============================ ==============================
Weighted average shares outstanding
(diluted) 54.1 55.1 54.2 56.4
=================== =====================
<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 4
<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 <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 5
<PAGE>
ALLMERICA FINANCIAL CORPORATION
SEGMENT RESULTS
BALANCE SHEET HIGHLIGHTS
<TABLE>
<CAPTION>
(In millions) June 30, 2000
Asset Accumulation
--------------------------
Allmerica Allmerica
Risk Financial Asset
Management Services Management Corporate Total
<S> <C> <C> <C> <C> <C>
Cash and investments $ 3,613.4 $ 3,017.9 $ 1,895.5 $ 121.8 $ 8,648.6
Reinsurance receivables 971.5 331.8 0.0 0.0 1,303.3
Deferred policy acquisition costs 183.5 1,322.1 0.3 0.0 1,505.9
Separate account assets 0.0 18,477.5 0.0 0.0 18,477.5
Other assets 1,121.7 230.0 19.5 6.6 1,384.8
Closed Block assets 0.0 768.5 0.0 0.0 768.5
--------------------------------------------------------------------------
Total assets $ 5,897.1 $24,147.8 $ 1,915.3 $ 128.4 $32,088.6
=========================================================================
Policy liabilities and accruals:
Future policy benefits $ 175.1 $ 2,510.0 $0.0 $0.0 $ 2,685.1
Outstanding claims, losses
and loss adjustment
expenses 2,799.7 25.4 0.0 0.0 2,825.1
Unearned premiums 961.5 2.9 0.0 0.0 964.4
Contractholder deposit funds
and other policy liabilities 25.3 648.1 1,522.9 0.0 2,196.3
--------------------------------------------------------------------------
Total policy liabilities
and accruals $ 3,961.6 $ 3,186.4 $ 1,522.9 $ 0.0 $ 8,670.9
=========================================================================
Separate account liabilities $ 0.0 $18,476.5 $ 0.0 $ 0.0 $18,476.5
=========================================================================
Closed Block liabilities $ 0.0 $ 824.9 $ 0.0 $ 0.0 $ 824.9
=========================================================================
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
Asset Accumulation
------------------------------
Allmerica Allmerica
Risk Financial Asset
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 1,128.8 223.2 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 $ 824.1
=========================================================================
</TABLE>
Page 6
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
CONDENSED INCOME STATEMENT
<TABLE>
<CAPTION>
Quarter ended June 30 Six Months ended June 30
(In millions) 2000 1999 % Change 2000 1999 % Change
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Net premiums written $ 562.2 $505.2 11.3 $1,089.8 $ 982.4 10.9
Change in unearned premiums, net of
prepaid reinsurance premiums (42.6) (10.6) N/M (73.2) (30.2) N/M
------------------------ ---------------------------
Net premiums earned 519.6 494.6 5.1 1,016.6 952.2 6.8
Net investment income 54.4 55.1 (1.3) 109.6 113.5 (3.4)
Other income 5.4 4.8 12.5 10.7 10.1 5.9
------------------------- ---------------------------
Total operating revenue 579.4 554.5 4.5 1,136.9 1,075.8 5.7
------------------------- ---------------------------
LOSSES AND OPERATING EXPENSES
Policy benefits, claims, losses
and loss adjustment expenses 383.6 351.8 9.0 759.3 705.5 7.6
Policy acquisition expenses 93.9 93.1 0.9 186.0 181.6 2.4
Other operating expenses 48.0 54.3 (11.6) 94.6 103.6 (8.7)
------------------------ ---------------------------
Total losses and operating expenses 525.5 499.2 5.3 1,039.9 990.7 5.0
------------------------ ---------------------------
Net operating income before taxes $ 53.9 $ 55.3 (2.5) $ 97.0 $ 85.1 14.0
========================= ===========================
</TABLE>
The Risk Management Segment manages its products through three distribution
channels identified as Standard Markets,Sponsored Markets, and Specialty
Markets.
Standard Markets sells property & casualty insurance products through
independent agents and brokers primarily in the Northeast, Midwest and
Southeast United States maintaining a strong regional focus. Sponsored
Markets 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. Specialty Markets offers
specialty or program business nationwide.
Page 7
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
STATUTORY UNDERWRITING PROFIT/(LOSS) BY DISTRIBUTION
CHANNEL, RECONCILED TO GAAP
<TABLE>
<CAPTION>
(In millions) Quarter ended June 30, 2000
Standard Sponsored Specialty
Markets Markets Markets Other Total
<FN1>
<S> <C> <C> <C> <C> <C>
Net premiums earned $360.2 $144.5 $ 9.9 $ 1.3 $ 515.9
Policy benefits,
claims, losses
and loss adjustment
expenses 263.5 109.7 5.2 0.9 379.3
Policy acquisition
and other underwriting
expenses 108.6 34.4 3.2 1.2 147.4
Policyholders'
dividends 2.6 0.0 0.0 0.0 2.6
-------------------------------------------------------
Underwriting (loss)
profit $(14.5) $ 0.4 $ 1.5 $ (0.8) (13.4)
---------------------------------------------
Net investment income 54.4
Other income and
expenses, net 2.8
Net deferred
acquisition costs 7.7
Other Statutory to
GAAP adjustments 2.4
---------
Net operating
income before
taxes - GAAP Basis $ 53.9
=========
PRETAX CATASTROPHE
LOSSES $ 8.1 $ 9.7 $ 0.0 $ 0.0 $ 17.8
=======================================================
<FN>
<FN1>
Includes results from certain property and casualty business which the
Company has exited.
</FN>
</TABLE>
<TABLE>
<CAPTION>
(In millions) Quarter ended June 30, 1999
Standard Sponsored Specialty
Markets Markets Markets Other Total
<FN1>
<S> <C> <C> <C> <C> <C>
Net premiums
earned $352.5 $129.0 $ 12.2 $ (0.3) $493.4
Policy benefits,
claims, losses
and loss adjustment
expenses 244.7 97.2 8.7 (0.7) 349.9
Policy acquisition
and other underwriting
expenses 106.7 34.3 3.5 0.4 144.9
Policyholders'
dividends 2.3 0.0 0.0 0.0 2.3
------------------------------------------------------
Underwriting loss $ (1.2) $ (2.5) $ 0.0 $ 0.0 (3.7)
---------------------------------------------
Net investment income 55.1
Other income and
expenses, net 1.4
Net deferred
acquisition costs (1.6)
Other Statutory to
GAAP adjustments 4.1
-------
Net operating income
before taxes -
GAAP Basis $ 55.3
=======
PRETAX CATASTROPHE
LOSSES $ 4.5 $ 4.7 $ 0.0 $ 0.0 $ 9.2
======================================================
<FN>
<FN1>
Includes results from certain property and casualty business which the
Company has exited.
</FN>
</TABLE>
Page 8
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
STATUTORY UNDERWRITING PROFIT/(LOSS) BY DISTRIBUTION
CHANNEL, RECONCILED TO GAAP
<TABLE>
<CAPTION>
(In millions) Six Months ended June 30, 2000
Standard Sponsored Specialty
Markets Markets Markets Other Total
<FN1>
<S> <C> <C> <C> <C> <C>
Net premiums earned $709.9 $284.6 $ 16.5 $ 1.7 $1,012.7
Policy benefits,
claims, losses
and loss adjustment
expenses 525.4 211.5 11.6 3.2 751.7
Policy acquisition
and other underwriting
expenses 211.9 70.7 4.7 1.7 289.0
Policyholders'
dividends 5.4 0.0 0.0 0.0 5.4
-------------------------------------------------------
Underwriting (loss)
profit $(32.8) $ 2.4 $ 0.2 $ (3.2) (33.4)
----------------------------------------------
Net investment income 109.6
Other income and
expenses, net 5.4
Net deferred
acquisition costs 11.8
Other Statutory to
GAAP adjustments 3.6
---------
Net operating
income before
taxes - GAAP Basis $ 97.0
=========
PRETAX CATASTROPHE
LOSSES $ 22.8 $ 10.2 $ 0.0 $ 0.0 $ 33.0
=======================================================
<FN>
<FN1>
Includes results from certain property and casualty business which the
Company has exited.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Six Months ended June 30, 1999
Standard Sponsored Specialty
Markets Markets Markets Other Total
<FN1>
<S> <C> <C> <C> <C> <C>
Net premiums
earned $671.5 $250.8 $ 26.3 $ 2.6 $951.2
Policy benefits,
claims, losses
and loss adjustment
expenses 485.6 191.9 18.3 3.3 699.1
Policy acquisition
and other underwriting
expenses 205.6 66.5 8.1 0.4 280.6
Policyholders'
dividends 4.2 0.0 0.0 0.0 4.2
------------------------------------------------------
Underwriting loss $(23.9) $ (7.6) $ (0.1) $ (1.1) (32.7)
----------------------------------------------
Net investment income 113.5
Other income and
expenses, net 3.3
Net deferred
acquisition costs (2.3)
Other Statutory to
GAAP adjustments 3.3
-------
Net operating income
before taxes -
GAAP Basis $ 85.1
=======
PRETAX CATASTROPHE
LOSSES $ 29.0 $ 23.9 $ 0.0 $ 0.0 $ 52.9
=====================================================
<FN>
<FN1>
Includes results from certain property and casualty business which the
Company has exited.
</FN>
</TABLE>
Page 9
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
SELECTED STATUTORY INFORMATION BY DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
(In millions, except ratios) Quarter ended June 30, 2000
Standard Sponsored Specialty
Markets Markets Markets Other Total
<S> <C> <C> <C> <C> <C>
NET PREMIUMS WRITTEN
Personal automobile $ 125.4 $ 115.2 $ 0.0 $ 2.0 $ 242.6
Homeowners 43.5 32.9 0.0 0.1 76.5
Workers' compensation 53.8 0.0 2.3 0.0 56.1
Commercial automobile 59.1 0.0 4.8 (0.2) 63.7
Commercial multiple
peril 79.1 0.0 1.1 0.0 80.2
Other property
& casualty 32.1 3.0 3.7 0.5 39.3
-------------------------------------------------
Total $ 393.0 $ 151.1 $ 11.9 $ 2.4 $ 558.4
=================================================
NET PREMIUMS EARNED
Personal automobile $ 117.0 $ 113.8 $ 0.0 $ 1.3 $ 232.1
Homeowners 39.0 28.1 0.0 0.0 67.1
Workers' compensation 50.1 0.0 3.3 0.0 53.4
Commercial automobile 52.5 0.0 2.8 (0.6) 54.7
Commercial multiple
peril 73.8 0.0 1.4 0.0 75.2
Other property
& casualty 27.8 2.6 2.4 0.6 33.4
-------------------------------------------------
Total $ 360.2 $ 144.5 $ 9.9 $ 1.3 $ 515.9
=================================================
POLICY BENEFITS, CLAIMS
AND LOSSES
Personal automobile $ 80.2 $ 78.7 $ 0.0 $ 1.1 $ 160.0
Homeowners 28.1 21.4 0.0 0.0 49.5
Workers' compensation 39.9 0.0 1.3 (0.3) 40.9
Commercial automobile 35.7 0.0 1.3 (0.4) 36.6
Commercial multiple
peril 39.3 0.0 (0.3) 0.6 39.6
Other property
& casualty 8.1 0.8 1.3 0.0 10.2
-------------------------------------------------
Total $ 231.3 $ 100.9 $ 3.6 $ 1.0 $ 336.8
=================================================
LOSS ADJUSTMENT EXPENSES $ 32.2 $ 8.8 $ 1.6 $ (0.1) $ 42.5
=================================================
RATIOS
LOSSES
Personal automobile 68.7 % 69.1 % 0.0 % N/M 68.9 %
Homeowners 71.8 % 76.2 % 0.0 % N/M 73.5 %
Workers' compensation 79.3 % 0.0 % 39.4 % N/M 76.4 %
Commercial automobile 67.8 % 0.0 % 46.4 % N/M 66.9 %
Commercial multiple
peril 53.3 % 0.0 % N/M N/M 52.7 %
Other property
& casualty 29.2 % 30.8 % 54.2 % N/M 30.6 %
-------------------------------------------------
Total 64.2 % 69.8 % 36.4 % N/M 65.3 %
LOSS ADJUSTMENT EXPENSES 8.9 % 6.1 % 16.2 % N/M 8.2 %
POLICY ACQUISITION AND
OTHER UNDERWRITING
EXPENSES 27.7 % 22.6 % 26.9 % N/M 26.4 %
POLICYHOLDERS' DIVIDENDS 0.7 % 0.0 % 0.0 % N/M 0.5 %
-------------------------------------------------
COMBINED 101.5 % 98.5 % 79.5 % N/M 100.4 %
=================================================
</TABLE>
Page 10
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
SELECTED STATUTORY INFORMATION BY DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
(In millions, except ratios) Quarter ended June 30, 1999
Standard Sponsored Specialty
Markets Markets Markets Other Total
<S> <C> <C> <C> <C> <C>
NET PREMIUMS WRITTEN
Personal automobile $ 114.4 $ 105.9 $ 0.0 $ 0.3 $ 220.6
Homeowners 45.1 29.4 0.0 (0.6) 73.9
Workers' compensation 47.8 0.0 0.8 1.1 49.7
Commercial automobile 49.0 0.0 0.8 (0.1) 49.7
Commercial multiple
peril 69.2 0.0 2.6 0.5 72.3
Other property
& casualty 30.4 3.1 5.8 (1.3) 38.0
-------------------------------------------------
Total $ 355.9 $ 138.4 $ 10.0 $ (0.1) $ 504.2
=================================================
NET PREMIUMS EARNED
Personal automobile $ 122.6 $ 101.5 $ 0.0 $ 0.2 $ 224.3
Homeowners 43.2 25.1 0.0 (0.5) 67.8
Workers' compensation 47.1 0.0 0.6 0.9 48.6
Commercial automobile 45.4 0.0 2.1 0.0 47.5
Commercial multiple
peril 67.0 0.0 3.5 0.6 71.1
Other property
& casualty 27.2 2.4 6.0 (1.5) 34.1
-------------------------------------------------
Total $ 352.5 $ 129.0 $ 12.2 $ (0.3) $ 493.4
=================================================
POLICY BENEFITS, CLAIMS
AND LOSSES
Personal automobile $ 68.9 $ 68.2 $ 0.0 $ (0.6) $ 136.5
Homeowners 26.9 20.4 0.0 (0.3) 47.0
Workers' compensation 29.7 0.0 0.0 0.2 29.9
Commercial automobile 30.0 0.0 1.7 (0.6) 31.1
Commercial multiple
peril 47.0 0.0 3.4 0.5 50.9
Other property
& casualty 9.3 1.0 1.8 0.5 12.6
-------------------------------------------------
Total $ 211.8 $ 89.6 $ 6.9 $ (0.3) $ 308.0
=================================================
LOSS ADJUSTMENT EXPENSES $ 32.9 $ 7.6 $ 1.8 $ (0.4) $ 41.9
=================================================
RATIOS
LOSSES
Personal automobile 56.2 % 67.2 % 0.0 % N/M 60.9 %
Homeowners 62.3 % 81.3 % 0.0 % N/M 68.9 %
Workers' compensation 63.1 % 0.0 % N/M N/M 61.5 %
Commercial automobile 66.1 % 0.0 % 81.0 % N/M 65.5 %
Commercial multiple
peril 70.1 % 0.0 % 97.1 % N/M 71.7 %
Other property
& casualty 34.2 % 43.5 % 30.0 % N/M 38.6 %
-------------------------------------------------
Total 60.1 % 69.5 % 56.6 % N/M 62.4 %
LOSS ADJUSTMENT EXPENSES 9.3 % 5.8 % 14.8 % N/M 8.5 %
POLICY ACQUISITION AND
OTHER UNDERWRITING
EXPENSES 30.0 % 24.8 % 35.0 % N/M 28.7 %
POLICYHOLDERS' DIVIDENDS 0.7 % 0.0 % 0.0 % N/M 0.5 %
-------------------------------------------------
COMBINED 100.1 % 100.1 % 106.4 % N/M 100.1 %
=================================================
</TABLE>
Page 11
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
SELECTED STATUTORY INFORMATION BY DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
(In millions, except ratios) Six Months ended June 30, 2000
Standard Sponsored Specialty
Markets Markets Markets Other Total
<S> <C> <C> <C> <C> <C>
NET PREMIUMS WRITTEN
Personal automobile $ 253.1 $ 243.7 $ 0.0 $ 2.1 $ 498.9
Homeowners 77.3 54.0 0.0 (0.1) 131.2
Workers' compensation 107.9 0.0 2.7 0.0 110.6
Commercial automobile 111.8 0.0 5.9 (0.2) 117.5
Commercial multiple
peril 154.3 0.0 2.9 (0.1) 157.1
Other property
& casualty 57.8 5.0 6.8 1.0 70.6
--------------------------------------------------
Total $ 762.2 $ 302.7 $ 18.3 $ 2.7 $1,085.9
=================================================
NET PREMIUMS EARNED
Personal automobile $ 227.6 $ 223.5 $ 0.0 $ 1.4 $ 452.5
Homeowners 78.1 55.9 0.0 (0.1) 133.9
Workers' compensation 100.4 0.0 4.1 0.0 104.5
Commercial automobile 102.6 0.0 3.4 (0.7) 105.3
Commercial multiple
peril 145.7 0.0 2.8 (0.1) 148.4
Other property
& casualty 55.5 5.2 6.2 1.2 68.1
--------------------------------------------------
Total $ 709.9 $ 284.6 $ 16.5 $ 1.7 $1,012.7
=================================================
POLICY BENEFITS, CLAIMS
AND LOSSES
Personal automobile $ 152.7 $ 149.5 $ 0.0 $ 0.6 $ 302.8
Homeowners 57.1 43.3 0.0 (0.4) 100.0
Workers' compensation 76.8 0.0 2.2 0.1 79.1
Commercial automobile 65.6 0.0 3.6 (0.6) 68.6
Commercial multiple
peril 88.3 0.0 1.1 1.9 91.3
Other property
& casualty 19.5 1.9 1.5 1.3 24.2
--------------------------------------------------
Total $ 460.0 $ 194.7 $ 8.4 $ 2.9 $ 666.0
==================================================
LOSS ADJUSTMENT EXPENSES $ 65.4 $ 16.8 $ 3.2 $ 0.3 $ 85.7
==================================================
RATIOS
LOSSES
Personal automobile 67.2 % 66.9 % 0.0 % N/M 66.9 %
Homeowners 73.1 % 77.5 % 0.0 % N/M 74.7 %
Workers' compensation 76.5 % 0.0 % 53.7 % N/M 75.8 %
Commercial automobile 63.9 % 0.0 % 105.9 % N/M 65.1 %
Commercial multiple
peril 60.6 % 0.0 % 39.3 % N/M 61.5 %
Other property
& casualty 35.2 % 36.5 % 23.8 % N/M 35.5 %
-------------------------------------------------
Total 64.8 % 68.4 % 50.6 % N/M 65.8 %
LOSS ADJUSTMENT EXPENSES 9.2 % 5.9 % 19.3 % N/M 8.5 %
POLICY ACQUISITION AND
OTHER UNDERWRITING
EXPENSES 27.8 % 23.4 % 25.7 % N/M 26.6 %
POLICYHOLDERS' DIVIDENDS 0.8 % 0.0 % 0.0 % N/M 0.5 %
--------------------------------------------------
COMBINED 102.6 % 97.7 % 95.6 % N/M 101.4 %
==================================================
</TABLE>
Page 12
<PAGE>
ALLMERICA FINANCIAL CORPORATION
RISK MANAGEMENT
SELECTED STATUTORY INFORMATION BY DISTRIBUTION CHANNEL
<TABLE>
<CAPTION>
(In millions, except ratios) Six Months ended June 30, 1999
Standard Sponsored Specialty
Markets Markets Markets Other Total
<S> <C> <C> <C> <C> <C>
NET PREMIUMS WRITTEN
Personal automobile $ 241.4 $ 226.4 $ 0.0 $ 0.1 $ 467.9
Homeowners 69.7 36.4 0.0 (0.4) 105.7
Workers' compensation 97.7 0.0 3.4 0.8 101.9
Commercial automobile 95.9 0.0 3.2 (0.2) 98.9
Commercial multiple
peril 133.1 0.0 5.6 0.5 139.2
Other property
& casualty 56.2 3.3 9.2 (0.5) 68.2
-------------------------------------------------
Total $ 694.0 $ 266.1 $ 21.4 $ 0.3 $ 981.8
=================================================
NET PREMIUMS EARNED
Personal automobile $ 235.3 $ 209.5 $ 0.0 $ 1.1 $ 445.9
Homeowners 76.8 36.7 0.0 0.1 113.6
Workers' compensation 90.7 0.0 2.5 0.9 94.1
Commercial automobile 89.7 0.0 4.8 0.3 94.8
Commercial multiple
peril 126.3 0.0 7.5 0.9 134.7
Other property
& casualty 52.7 4.6 11.5 (0.7) 68.1
-------------------------------------------------
Total $ 671.5 $ 250.8 $ 26.3 $ 2.6 $ 951.2
=================================================
POLICY BENEFITS, CLAIMS
AND LOSSES
Personal automobile $ 147.6 $ 143.3 $ 0.0 $ (0.8) $ 290.1
Homeowners 49.3 32.7 0.0 (0.3) 81.7
Workers' compensation 58.1 0.0 (0.8) 1.2 58.5
Commercial automobile 62.5 0.0 4.1 (0.5) 66.1
Commercial multiple
peril 89.7 0.0 5.6 1.7 97.0
Other property
& casualty 16.2 2.2 5.7 2.2 26.3
-------------------------------------------------
Total $ 423.4 $ 178.2 $ 14.6 $ 3.5 $ 619.7
=================================================
LOSS ADJUSTMENT EXPENSES $ 62.2 $ 13.7 $ 3.7 $ (0.2) $ 79.4
=================================================
RATIOS
LOSSES
Personal automobile 62.7 % 68.4 % 0.0 % N/M 65.1 %
Homeowners 64.2 % 89.1 % 0.0 % N/M 72.0 %
Workers' compensation 64.1 % 0.0 % N/M N/M 62.2 %
Commercial automobile 69.7 % 0.0 % 85.4 % N/M 69.6 %
Commercial multiple
peril 71.0 % 0.0 % 74.7 % N/M 72.1 %
Other property
& casualty 30.7 % 47.8 % 49.6 % N/M 38.2 %
-------------------------------------------------
Total 63.1 % 71.0 % 55.5 % N/M 65.2 %
LOSS ADJUSTMENT EXPENSES 9.3 % 5.5 % 14.1 % N/M 8.3 %
POLICY ACQUISITION AND
OTHER UNDERWRITING
EXPENSES 29.6 % 25.0 % 37.9 % N/M 28.6 %
POLICYHOLDERS' DIVIDENDS 0.6 % 0.0 % 0.0 % N/M 0.4 %
-------------------------------------------------
COMBINED 102.6 % 101.5 % 107.5 % N/M 102.5 %
=================================================
</TABLE>
Page 13
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA FINANCIAL SERVICES
CONDENSED INCOME STATEMENT
<TABLE>
Quarter ended June 30 Six Months ended June 30
(In millions) 2000 1999 % Change 2000 1999 % Change
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums $ 0.5 $ 0.1 N/M $ 1.0 $ 0.8 25.0
Universal life and investment product
policy fees 102.7 88.6 15.9 205.2 171.5 19.7
Net investment income 58.6 64.1 (8.6) 118.4 127.6 (7.2)
Other income 28.3 19.2 47.4 54.6 36.5 49.6
Operating contribution from the Closed Block 4.9 2.8 75.0 8.4 6.6 27.3
-------------------------- ----------------------------
Total operating revenue 195.0 174.8 11.6 387.6 343.0 13.0
-------------------------- ----------------------------
POLICY BENEFITS, CLAIMS AND
OPERATING EXPENSES
Policy benefits, claims and losses 53.1 56.9 (6.7) 109.0 119.8 (9.0)
Policy acquisition expenses 23.2 21.0 10.5 48.9 26.6 83.8
Other operating expenses 63.2 49.2 28.5 119.8 100.0 19.8
-------------------------- ----------------------------
Total policy benefits, claims and
operating expenses 139.5 127.1 9.8 277.7 246.4 12.7
-------------------------- ----------------------------
Net operating income before taxes 55.5 47.7 16.4 $ 109.9 $ 96.6 13.8
========================== ===========================
</TABLE>
Page 14
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA FINANCIAL SERVICES
OPERATING INCOME BY PRODUCT LINE
<TABLE>
<CAPTION>
(In millions) Quarter ended June 30, 2000
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 $ 8.3 $ 0.0 $ 0.5 $ 8.8
Universal life
and investment
product policy
fees 58.5 21.3 16.4 0.0 6.5 0.0 102.7
Net investment
income 14.2 0.5 18.9 13.8 19.3 5.7 72.4
Other income 9.3 1.6 0.2 0.0 2.3 14.9 28.3
------------------------------------------------------------------
Total
operating
revenue 82.0 23.4 35.5 22.1 28.1 21.1 212.2
------------------------------------------------------------------
POLICY BENEFITS,
CLAIMS AND
OPERATING EXPENSES
Policy benefits,
claims and
losses 10.9 10.7 17.1 16.9 12.8 1.6 70.0
Policy acquisition
expenses 16.3 1.2 5.0 0.4 0.7 0.0 23.6
-------------------------------------------------------------------
Total policy
benefits,
claims, and
policy
acquisition
expenses 27.2 11.9 22.1 17.3 13.5 1.6 93.6
------------------------------------------------------------------
Operating income
before other
operating
expenses $ 54.8 $ 11.5 $ 13.4 $ 4.8 $ 14.6 $ 19.5 118.6
==========================================================
Other operating
expenses <FN3> 63.1
--------
Net operating
income before
taxes $ 55.5
========
<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 (credits) from the Closed Block of approximately
$(0.1) million for the quarter ended June 30, 2000.
</FN>
</TABLE>
<TABLE>
<CAPTION>
(In millions) Quarter ended June 30, 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 $ 8.4 $ 0.0 $ 0.1 $ 8.5
Universal life
and investment
product policy
fees 47.7 18.4 17.1 0.0 5.4 0.0 88.6
Net investment
income 18.5 0.2 20.2 13.5 19.6 5.6 77.6
Other income 7.3 1.1 0.2 0.0 2.3 8.3 19.2
------------------------------------------------------------------
Total
operating
revenue 73.5 19.7 37.5 21.9 27.3 14.0 193.9
------------------------------------------------------------------
POLICY BENEFITS,
CLAIMS AND
OPERATING EXPENSES
Policy benefits,
claims and
losses 16.5 5.1 19.2 18.9 14.4 1.7 75.8
Policy acquisition
expenses 14.2 1.0 4.8 0.6 1.0 0.0 21.6
-------------------------------------------------------------------
Total policy
benefits,
claims, and
policy
acquisition
expenses 30.7 6.1 24.0 19.5 15.4 1.7 97.4
------------------------------------------------------------------
Operating income
before other
operating
expenses $ 42.8 $ 13.6 $ 13.5 $ 2.4 $ 11.9 $ 12.3 96.5
==========================================================
Other operating
expenses <FN3> 48.8
--------
Net operating
income before
taxes $ 47.7
=========
<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 (credits) from the Closed Block of approximately
$(0.4) million for the quarter ended June 30, 1999.
</FN>
</TABLE>
Page 15
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA FINANCIAL SERVICES
OPERATING INCOME BY PRODUCT LINE
<TABLE>
<CAPTION>
(In millions) Six Months ended June 30, 2000
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 $ 34.3 $ 0.0 $ 1.0 $ 35.3
Universal life
and investment
product policy
fees 116.0 41.9 33.1 0.0 14.2 0.0 205.2
Net investment
income 29.5 1.2 37.9 27.0 38.7 11.1 145.4
Other income 18.6 3.0 0.4 0.0 3.9 28.7 54.6
------------------------------------------------------------------
Total
operating
revenue 164.1 46.1 71.4 61.3 56.8 40.8 440.5
------------------------------------------------------------------
POLICY BENEFITS,
CLAIMS AND
OPERATING EXPENSES
Policy benefits,
claims and
losses 29.0 17.5 35.0 51.7 25.1 2.4 160.7
Policy acquisition
expenses 34.8 2.7 10.1 1.0 1.3 0.0 49.9
-------------------------------------------------------------------
Total policy
benefits,
claims, and
policy
acquisition
expenses 63.8 20.2 45.1 52.7 26.4 2.4 210.6
------------------------------------------------------------------
Operating income
before other
operating
expenses $100.3 $ 25.9 $ 26.3 $ 8.6 $ 30.4 $ 38.4 229.9
==========================================================
Other operating
expenses <FN3> 120.0
--------
Net operating
income before
taxes $ 109.9
=========
<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
$0.2 million for the six months ended June 30, 2000.
</FN>
</TABLE>
<TABLE>
<CAPTION>
(In millions) Six Months ended June 30, 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 $ 35.6 $ 0.0 $ 0.8 $ 36.4
Universal life
and investment
product policy
fees 89.7 36.1 34.5 0.0 11.2 0.0 171.5
Net investment
income 35.3 0.4 38.8 26.6 39.9 13.2 154.2
Other income 14.4 2.1 0.5 0.0 4.1 15.4 36.5
------------------------------------------------------------------
Total
operating
revenue 139.4 38.6 73.8 62.2 55.2 29.4 398.6
------------------------------------------------------------------
POLICY BENEFITS,
CLAIMS AND
OPERATING EXPENSES
Policy benefits,
claims and
losses 39.9 11.3 38.1 54.4 27.3 3.2 174.2
Policy acquisition
expenses 12.5 3.1 9.1 1.1 1.9 0.0 27.7
-------------------------------------------------------------------
Total policy
benefits,
claims, and
policy
acquisition
expenses 52.4 14.4 47.2 55.5 29.2 3.2 201.9
------------------------------------------------------------------
Operating income
before other
operating
expenses $ 87.0 $ 24.2 $ 26.6 $ 6.7 $ 26.0 $ 26.2 196.7
==========================================================
Other operating
expenses <FN3> 100.1
--------
Net operating
income before
taxes $ 96.6
=========
<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 six months ended June 30, 1999.
</FN>
</TABLE>
Page 16
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA FINANCIAL SERVICES
PREMIUMS, DEPOSITS AND OTHER INCOME
<TABLE>
<CAPTION>
Quarter ended June 30 Six Months ended June 30
(In millions) 2000 1999 % Change 2000 1999 % Change
<S> <C> <C> <C> <C> <C> <C>
STATUTORY PREMIUMS AND DEPOSITS
SUMMARY
Insurance
Traditional life $ 13.9 $ 17.3 (19.7) $ 43.7 $ 48.7 (10.3)
Universal life 15.5 15.9 (2.5) 33.4 32.6 2.5
Variable universal life 51.5 43.8 17.6 102.7 89.1 15.3
Individual health 0.0 0.0 0.0 0.1 0.1 0.0
Group variable universal life 18.6 7.2 N/M 30.1 17.6 71.0
------------------------ ---------------------------
Total insurance 99.5 84.2 18.2 210.0 188.1 11.6
------------------------ ---------------------------
Annuities
Separate account annuities 676.5 510.5 32.5 1,355.4 1,009.1 34.3
General account annuities 125.4 251.5 (50.1) 264.1 461.8 (42.8)
Retirement investment accounts 2.6 3.6 (27.8) 6.1 9.5 (35.8)
------------------------ ---------------------------
Total individual annuities 804.5 765.6 5.1 1,625.6 1,480.4 9.8
Group annuities 90.7 112.2 (19.2) 259.3 194.3 33.5
------------------------ ---------------------------
Total annuities 895.2 877.8 2.0 1,884.9 1,674.7 12.6
------------------------ ---------------------------
Total premiums and deposits $ 994.7 $ 962.0 3.4 $2,094.9 $1,862.8 12.5
======================== ==========================
COMPONENTS
Insurance
Traditional life
New business premium $ 1.1 $ 0.7 57.1 $ 10.8 $ 10.4 3.8
Renewal premium and deposits 12.8 16.6 (22.9) 32.9 38.3 (14.1)
------------------------ ---------------------------
$ 13.9 $ 17.3 (19.7) $ 43.7 $ 48.7 (10.3)
======================== ==========================
Universal life
New business premium $ 0.1 $ 0.1 (0.0) $ 0.2 $ 0.3 (33.3)
Renewal premium and deposits 15.4 15.8 (2.5) 33.2 32.3 2.8
------------------------ ---------------------------
$ 15.5 $ 15.9 (2.5) $ 33.4 $ 32.6 2.5
======================== ==========================
Variable universal life
New business premium $ 28.6 $ 21.8 31.2 $ 55.8 $ 44.0 26.8
Renewal premium and deposits 22.9 22.0 4.1 46.9 45.1 4.0
------------------------ ---------------------------
$ 51.5 $ 43.8 17.6 $ 102.7 $ 89.1 15.3
======================== ==========================
Individual annuities by distribution
channel
Agency $ 244.5 $ 270.1 (9.5) $ 484.4 $ 479.7 1.0
Select 197.6 159.1 24.2 416.4 312.7 33.2
Kemper 256.5 174.7 46.8 519.0 343.5 51.1
Pioneer 56.0 94.4 (40.7) 106.0 189.7 (44.1)
Delaware 46.6 59.0 (21.0) 92.5 133.3 (30.6)
Fulcrum 0.7 4.7 (85.1) 1.2 12.0 (90.0)
Retirement investment accounts 2.6 3.6 (27.8) 6.1 9.5 (35.8)
------------------------ ---------------------------
$ 804.5 $ 765.6 5.1 $1,625.6 $1,480.4 9.8
======================== ==========================
GAAP OTHER INCOME
(Excluding Closed Block)
Investment management fees $ 12.0 $ 9.9 21.2 $ 23.3 $ 18.7 24.6
Brokerage income 10.9 5.9 84.7 20.8 10.7 94.4
Other 5.4 3.4 58.8 10.5 7.1 47.9
------------------------ ---------------------------
$ 28.3 $ 19.2 47.4 $ 54.6 $ 36.5 49.6
======================== ==========================
</TABLE>
Page 17
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA FINANCIAL SERVICES
FUTURE POLICY BENEFITS AND ACCOUNT BALANCES
<TABLE>
<CAPTION>
June 30 December 31
(In millions) 2000 1999 % Change
<S> <C> <C> <C>
GENERAL ACCOUNT RESERVES
Insurance
Traditional life, excluding Closed Block $ 34.9 $ 37.7 (7.4)
Universal life 790.4 816.1 (3.1)
Variable universal life 150.7 136.3 10.6
Individual health 269.9 273.0 (1.1)
Group variable universal life 9.0 10.0 (10.0)
----------------------------
Total insurance 1,254.9 1,273.1 (1.4)
----------------------------
Annuities
Individual annuities 1,105.9 1,219.0 (9.3)
Group annuities 825.6 870.9 (5.2)
----------------------------
Total annuities 1,931.5 2,089.8 (7.6)
----------------------------
Total general account reserves $ 3,186.4 $ 3,363.0 (5.3)
============================
SEPARATE ACCOUNT LIABILITIES
Variable individual life $ 1,294.1 $ 1,244.8 4.0
Variable individual annuities 14,651.3 13,872.6 5.6
----------------------------
Total individual 15,945.4 15,117.4 5.5
Group variable universal life 293.0 260.5 12.5
Group annuities 2,238.1 2,251.0 (0.6)
----------------------------
Total group 2,531.1 2,511.5 0.8
----------------------------
Total separate account liabilities $18,476.5 $17,628.9 4.8
============================
</TABLE>
Page 18
<PAGE>
ALLMERICA FINANCIAL CORPORATION
ALLMERICA ASSET MANAGEMENT
CONDENSED INCOME STATEMENTS AND SUPPLEMENTAL INFORMATION
<TABLE>
<CAPTION>
Quarter ended June 30 Six Months ended June 30
(In millions) 2000 1999 % Change 2000 1999 % Change
<S> <C> <C> <C> <C> <C> <C>
INTEREST MARGINS ON GICS
Net investment income $ 32.1 $ 36.9 (13.0) $ 58.5 $ 68.3 (14.3)
Interest credited 28.5 31.5 (9.5) 50.9 58.1 (12.4)
-------------------------- ---------------------------
Net interest margin 3.6 5.4 (33.3) 7.6 10.2 (25.5)
-------------------------- ---------------------------
OTHER INCOME AND EXPENSES
External fees and other income 1.5 1.6 (6.3) 3.1 3.0 3.3
Internal fees and other income 1.3 2.0 (35.0) 2.6 3.5 (25.7)
Other operating expenses 1.8 2.2 (18.2) 3.6 4.2 (14.3)
-------------------------- ---------------------------
Net operating income before taxes $ 4.6 $ 6.8 (32.4) $ 9.7 $ 12.5 (22.4)
========================== ==========================
</TABLE>
<TABLE>
<CAPTION>
Six Month ended June 30
2000 1999 % Change
<S> <C> <C> <C>
GIC DEPOSITS
Outstanding GIC deposits, beginning of
period $ 1,369.3 $ 1,791.8 (23.6)
Withdrawals during the period (145.3) (348.5) N/M
Deposits during the period 651.5 <FN1> 952.5 (31.6)
Interest credited during the period 50.9 58.1 (12.8)
----------------------------------
Outstanding GIC deposits, end of period $ 1,926.4 $ 2,453.9 (21.3)
==================================
<FN>
<FN1>
Includes $2.0 million of traditional GIC deposits for the six months ended
June 30, 2000.
</FN>
</TABLE>
<TABLE>
<CAPTION>
June 30
2000 1999
<S> <C> <C>
GIC SCHEDULED MATURITIES
1999 $ 0.0 $ 0.0
2000 40.2 90.1
2001 216.3 81.0
2002 231.9 26.7
2003+ 366.1 133.4
------------------------------
854.5 <FN2> 331.2 <FN2>
Short term funding agreement balances 1,071.9 2,122.7
--------------------------
$ 1,926.4 $ 2,453.9
==========================
<FN>
<FN2>
Includes $750.2 million and $101.9 million of long term funding agreement
balances for the quarters ended June 30, 2000 and 1999, respectively.
</FN>
</TABLE>
Page 19
<PAGE>
ALLMERICA FINANCIAL CORPORATION
CORPORATE
CONDENSED INCOME STATEMENTS
<TABLE>
<CAPTION>
Quarter ended June 30 Six Months ended June 30
(In millions) 2000 1999 % Change 2000 1999 % Change
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Net investment income $ 1.7 $ 2.4 (29.2) $ 2.7 $ 3.6 (25.0)
-------------------------- ---------------------------
OPERATING EXPENSES
Interest expense 3.8 3.8 0.0 7.6 7.6 0.0
Other operating expenses 10.1 12.1 (16.5) 21.8 25.5 (14.5)
-------------------------- ---------------------------
Total operating expenses 13.9 15.9 (12.6) 29.4 33.1 (11.2)
-------------------------- ---------------------------
Net operating loss before taxes and
minority interest $(12.2) $(13.5) (9.6) $(26.7) $(29.5) (9.5)
========================== ==========================
</TABLE>
Page 20
<PAGE>
ALLMERICA FINANCIAL CORPORATION
NET INVESTMENT INCOME, INCLUDING CLOSED BLOCK
<TABLE>
<CAPTION>
(In millions, except yields) Six Months ended June 30, 2000
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 $108.9 6.74% $109.8 8.09% $ 48.9 7.05% $ 1.5 7.86% $269.1 7.30%
Equity
securities 0.5 3.52% 0.0 0.00% 0.0 0.00% 0.0 0.00% 0.5 1.29%
Mortgages 0.0 0.00% 19.1 8.12% 7.0 8.26% 0.0 0.00% 26.1 8.16%
All other 2.1 0.00% 21.2 0.00% 3.6 0.00% 0.7 0.00% 27.6 0.00%
Investment
expenses (1.9) 0.00% (4.7) 0.00% (0.8) 0.00% 0.0 0.00% (7.4)0.00%
------------------------------------------------------------------------------------
Total $109.6 6.58% $145.4 7.39% $ 58.7 7.37% $ 2.2 6.02% $315.9 7.07%
=====================================================================================
<FN>
<FN1>
Includes purchase accounting adjustments of $2.3 million for the six months ended June 30, 2000.
<FN2>
Includes corporate eliminations of $0.5 million for the six months ended June 30, 2000.
</FN>
</TABLE>
<TABLE>
<CAPTION>
(In millions, except yields) Six Months ended June 30, 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 $110.2 6.66% $110.5 8.25% $ 60.9 6.30% $ 1.7 6.42% $283.3 7.10%
Equity
securities 0.8 2.05% 0.5 1.47% 0.0 0.00% 0.0 0.00% 1.3 1.77%
Mortgages 0.0 0.00% 21.1 8.33% 6.8 8.18% 0.0 0.00% 27.9 8.29%
All other 4.6 0.00% 26.3 0.00% 2.1 0.00% 1.4 0.00% 34.4 0.00%
Investment
expenses (2.1) 0.00% (4.2) 0.00% (1.5) 0.00% 0.0 0.00% (7.8)0.00%
-------------------------------------------------------------------------------------
Total $113.5 6.37% $154.2 7.74% $ 68.3 6.38% $ 3.1 4.48% $339.1 6.90%
====================================================================================
<FN>
<FN1>
Includes purchase accounting adjustments of $2.3 million for the six months ended June 30, 1999.
<FN2>
Includes corporate eliminations of $0.5 million for the six months ended June 30, 1999.
</FN>
</TABLE>
Page 21
<PAGE>
ALLMERICA FINANCIAL CORPORATION
HISTORICAL FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(In millions, except
per share data) Q2 00 Q1 00 1999 Q4 99 Q3 99 Q2 99 Q1 99
<S> <C> <C> <C> <C> <C> <C> <C>
NET OPERATING
INCOME BEFORE
TAXES AND MINORITY
INTEREST <FN1>
Risk
Management $ 53.9 $ 43.1 $ 199.6 $ 65.0 $ 49.5 $ 55.3 $ 29.8
------------------------------------------------------------------------
Asset
Accumulation
Allmerica
Financial
Services 55.5 54.4 205.5 54.2 54.7 47.7 48.9
Allmerica Asset
Management 4.6 5.1 23.5 5.3 5.7 6.8 5.7
-----------------------------------------------------------------------
60.1 59.5 229.0 59.5 60.4 54.5 54.6
-----------------------------------------------------------------------
Corporate (12.2) (14.5) (59.3) (16.1) (13.7) (13.5) (16.0)
-----------------------------------------------------------------------
Total net
operating income
before federal
income taxes and
minority interest 101.8 88.1 369.3 108.4 96.2 96.3 68.4
Federal income
taxes on
operating income (23.3) (17.7) (72.4) (23.6) (16.4) (19.3) (13.1)
Minority interest:
Distributions on
mandatorily
redeemable
preferred
securities of a
subsidiary
trust (4.0) (4.0) (16.0) (4.0) (4.0) (4.0) (4.0)
----------------------------------------------------------------------
Consolidated net
operating income $ 74.5 $ 66.4 $ 280.9 $ 80.8 $ 75.8 $ 73.0 $ 51.3
=======================================================================
INCOME FROM
CONTINUING
OPERATIONS $ 47.6 $ 30.2 $ 345.1 $ 68.4 $ 59.1 $ 66.8 $ 150.8
=======================================================================
NET INCOME $ 47.6 $ 30.2 $ 295.8 $ 68.4 $ 13.1 $ 60.2 $ 154.1
=======================================================================
PER SHARE DATA
(DILUTED)
NET OPERATING
INCOME $ 1.37 $ 1.22 $ 5.06 $ 1.48 $ 1.39 $ 1.32 $ 0.89
INCOME FROM
CONTINUING
OPERATIONS $ 0.88 $ 0.56 $ 6.21 $ 1.25 $ 1.08 $ 1.21 $ 2.61
NET INCOME $ 0.88 $ 0.56 $ 5.33 $ 1.25 $ 0.24 $ 1.09 $ 2.67
DIVIDENDS $ 0.00 $ 0.00 $ 0.25 $ 0.00 $ 0.25 $ 0.00 $ 0.00
WEIGHTED AVERAGE
SHARES OUTSTANDING
(DILUTED) 54.1 54.3 55.5 54.6 54.7 55.1 57.7
BALANCE SHEET
Total investments $ 8,321.4 $ 8,147.7 $ 7,888.7 $ 8,265.7 $ 9,043.7 $ 9,163.1
Separate account
assets $18,477.5 $18,595.5 $17,629.6 $15,102.9 $15,635.9 $14,329.4
Total assets $32,088.6 $31,854.1 $30,769.6 $29,080.0 $29,826.4 $28,461.2
Total shareholders'
equity $ 2,288.6 $ 2,267.7 $ 2,240.2 $ 2,213.2 $ 2,248.7 $ 2,387.5
Book value per
share $ 42.98 $ 42.27 $ 41.32 $ 40.86 $ 41.49 $ 42.30
Book value per
share,
excluding
SFAS No.115 $ 44.17 $ 43.13 $ 42.71 $ 41.76 $ 41.45 $ 40.97
<FN>
<FN1>
Net operating income excludes net realized gains (losses) and other non-
operating items, net of taxes and minority interest.
</FN>
</TABLE>
PAGE 22
<PAGE>
ALLMERICA FINANCIAL CORPORATION
HISTORICAL FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(In millions, except
per share data) 1998 Q4 98 Q3 98 Q2 98 Q1 98 1997 Q4 97 Q3 97 Q2 97 Q1 97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET OPERATING
INCOME BEFORE
TAXES AND
MINORITY
INTEREST <FN1>
Risk
Management $ 149.6 $ 52.4 $ 24.6 $ 34.9 $ 37.7 $ 174.2 $ 54.7 $ 36.1 $ 45.6 $ 37.8
-------------------------------------------------------------------------------------------------
Asset
Accumulation
Allmerica
Financial
Services 169.0 43.5 39.1 44.2 42.2 134.6 35.0 37.8 32.0 29.8
Allmerica
Asset
Management 23.7 6.7 6.9 6.2 3.9 18.4 4.6 5.2 5.4 3.2
-------------------------------------------------------------------------------------------------
192.7 50.2 46.0 50.4 46.1 153.0 39.6 43.0 37.4 33.0
-------------------------------------------------------------------------------------------------
Corporate (50.9) (15.3) (10.6) (12.7) (12.3) (48.0) (17.2) (11.8) (8.0) (11.0)
-------------------------------------------------------------------------------------------------
Total net
operating income
before federal
income taxes and
minority interest 291.4 87.3 60.0 72.6 71.5 279.2 77.1 67.3 75.0 59.8
Federal income
taxes on
operating income (53.1) (13.8) (10.7) (12.2) (16.4) (63.4) (16.7) (16.0) (18.9) (11.8)
Minority interest:
Distributions
on mandatorily
redeemable
preferred
securities of
a subsidiary
trust (16.0) (4.0) (4.0) (4.0) (4.0) (14.5) (4.0) (4.1) (4.0) (2.4)
Equity in earnings (9.8) (2.4) (1.9) (1.7) (3.8) (37.0) (5.4) (0.5) (16.5) (14.6)
-------------------------------------------------------------------------------------------------
Consolidated net
operating income $ 212.5 $ 67.1 $ 43.4 $ 54.7 $ 47.3 $ 164.3 $ 51.0 $ 46.7 $ 35.6 $ 31.0
=================================================================================================
INCOME FROM
CONTINUING
OPERATIONS $ 214.7 $ 67.7 $ 24.3 $ 59.2 $ 63.5 $ 192.6 $ 89.6 $ 55.6 $ 33.9 $ 13.5
================================================================================================
NET INCOME $ 201.2 $ 65.9 $ 8.2 $ 60.3 $ 66.8 $ 209.2 $ 94.9 $ 60.7 $ 37.7 $ 15.9
================================================================================================
PER SHARE DATA
(DILUTED)
NET OPERATING
INCOME $ 3.52 $ 1.12 $ 0.71 $ 0.91 $ 0.78 $ 3.00 $ 0.85 $ 0.80 $ 0.71 $ 0.62
INCOME FROM
CONTINUING
OPERATIONS $ 3.56 $ 1.13 $ 0.40 $ 0.98 $ 1.05 $ 3.52 $ 1.49 $ 0.95 $ 0.67 $ 0.27
NET INCOME $ 3.33 $ 1.10 $ 0.13 $ 1.00 $ 1.11 $ 3.82 $ 1.58 $ 1.04 $ 0.75 $ 0.32
DIVIDENDS $ 0.15 $ 0.00 $ 0.05 $ 0.05 $ 0.05 $ 0.20 $ 0.05 $ 0.05 $ 0.05 $ 0.05
WEIGHTED AVERAGE
SHARES
OUTSTANDING
(DILUTED) 60.3 59.9 60.6 60.5 60.3 54.8 60.2 58.4 50.3 50.2
BALANCE SHEET
Total investments $ 9,057.6 $ 9,169.0 $ 9,274.0 $ 8,923.8 $ 8,700.7 $ 8,741.1 $ 8,808.4 $ 8,758.3
Separate account
assets $13,697.7 $11,424.9 $12,260.5 $11,425.4 $ 9,755.4 $ 9,233.6 $ 8,036.3 $ 6,705.8
Total assets $27,653.1 $25,233.5 $25,816.4 $24,511.8 $22,549.0 $21,967.2 $20,963.5 $19,625.6
Total shareholders'
equity $ 2,458.6 $ 2,480.3 $ 2,539.4 $ 2,468.8 $ 2,381.3 $ 2,263.4 $ 1,782.5 $ 1,672.0
Book value
per share $ 41.95 $ 41.02 $ 42.04 $ 40.94 $ 39.71$ 37.74 $ 35.47 $ 33.35
Book value
per share,
excluding
SFAS No.115 $ 38.87 $ 38.08 $ 38.01 $ 37.07 $ 36.08 $ 34.54 $ 32.66 $ 31.97
<FN>
<FN1>
Net operating income excludes net realized gains (losses) and other non-
operating items, net of taxes and minority interest.
</FN>
</TABLE>
PAGE 23
<PAGE>
ALLMERICA FINANCIAL CORPORATION
HISTORICAL FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
(In millions, except
per share data) 1996 Q4 96 Q3 96 Q2 96 Q1 96 1995 Q4 95 Q3 95 Q2 95 Q1 95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET OPERATING
INCOME BEFORE
TAXES AND
MINORITY
INTEREST <FN1>
Risk
Management $ 173.1 $ 43.6 $ 63.0 $ 40.0 $ 26.5 $ 212.0 $ 54.6 $ 58.0 $ 51.4 $ 48.0
-------------------------------------------------------------------------------------------------
Asset
Accumulation
Allmerica
Financial
Services 106.8 28.2 27.4 28.0 23.2 60.0 15.4 16.0 11.4 17.2
Allmerica
Asset
Management 11.5 5.4 2.8 2.1 1.2 12.2 3.5 2.5 3.8 2.4
-------------------------------------------------------------------------------------------------
118.3 33.6 30.2 30.1 24.4 72.2 18.9 18.5 15.2 19.6
-------------------------------------------------------------------------------------------------
Corporate (58.0) (21.8) (10.4) (11.5) (14.3) (47.8) (15.4) (11.7) (9.6) (11.1)
-------------------------------------------------------------------------------------------------
Total net
operating income
before federal
income taxes and
minority interest 233.4 55.4 82.8 58.6 36.6 236.4 58.1 64.8 57.0 56.5
Federal income
taxes on
operating income (50.8) (11.2) (21.5) (14.8) (3.3) (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 0.0 0.0 0.0 0.0 0.0
Equity in earnings (61.5) (14.9) (21.7) (13.3) (11.6) (69.2) (15.4) (19.4) (18.3) (16.1)
-------------------------------------------------------------------------------------------------
Consolidated net
operating income $ 121.1 $ 29.3 $ 39.6 $ 30.5 $ 21.7 $ 99.8 $ 22.5 $ 27.6 $ 24.6 $ 25.1
================================================================================================
INCOME FROM
CONTINUING
OPERATIONS $ 164.4 $ 37.4 $ 43.6 $ 39.7 $ 43.7 $ 117.9 $ 34.2 $ 25.6 $ 24.2 $ 33.9
================================================================================================
NET INCOME $ 181.9 $ 45.3 $ 46.7 $ 42.6 $ 47.3 $ 133.9 $ 40.7 $ 30.1 $ 26.4 $ 36.7
================================================================================================
PER SHARE DATA
(DILUTED)
NET OPERATING
INCOME $ 2.41 $ 0.58 $ 0.79 $ 0.61 $ 0.43 $ 1.99 $ 0.45 $ 0.55 $ 0.49 $ 0.50
INCOME FROM
CONTINUING
OPERATIONS $ 3.29 $ 0.76 $ 0.87 $ 0.79 $ 0.87 $ 2.35 $ 0.68 $ 0.51 $ 0.48 $ 0.68
NET INCOME $ 3.63 $ 0.91 $ 0.93 $ 0.85 $ 0.94 $ 2.67 $ 0.81 $ 0.60 $ 0.53 $ 0.73
DIVIDENDS $ 0.20 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 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 50.1 50.1 50.1 50.1 50.1
BALANCE SHEET
Total investments $ 8,993.4 $ 9,247.2 $ 9,439.6 $ 9,479.2 $ 9,430.7 $ 9,898.1 $ 9,941.5 $ 0.0
Separate account
Assets $ 6,233.0 $ 5,586.8 $ 5,197.9 $ 4,761.6 $ 4,348.8 $ 4,076.7 $ 3,659.2 $ 0.0
Total assets $18,970.3 $18,728.5 $18,506.1 $18,162.7 $17,757.7 $17,163.8 $16,798.7 $ 0.0
Total shareholders'
equity $ 1,724.7 $ 1,633.0 $ 1,563.5 $ 1,555.9 $ 1,574.2 $ 1,255.5 $ 1,230.1 $ 0.0
Book value per
share $ 34.40 $ 32.57 $ 31.20 $ 31.03 $ 31.40 $ 25.04 $ 24.54 $ 0.0
Book value per
share, excluding
SFAS No.115 $ 31.78 $ 30.92 $ 30.04 $ 29.24 $ 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 24
<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 2000
Price Range Dividends
High Low Per Share
<S> <C> <C> <C>
March 31 $53.50 $35.31 $0.00
June 30 $60.13 $46.31 $0.00
September 30
December 31
</TABLE>
<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 $64.44 $47.56 $0.25
December 31 $59.69 $46.50 $0.00
</TABLE>
INDUSTRY RATINGS
A.M. Standard Duff &
Claims Paying Best & Poor's Moody's Phelps
-----------------------------------------------------------------------------
First Allmerica Financial
Life Insurance Company A AA- A1 AA
-----------------------------------------------------------------------------
Allmerica Financial Life
Insurance and Annuity Company A AA- A1 AA
-----------------------------------------------------------------------------
The Hanover Insurance Company A AA- A1 -
-----------------------------------------------------------------------------
Citizens Insurance Company
of America A - - -
-----------------------------------------------------------------------------
Standard Duff &
Debt Ratings & Poor's Moody's Phelps
-----------------------------------------------------------------------------
Allmerica Financial Corporation
Senior Debt A- A2 A+
-----------------------------------------------------------------------------
Allmerica Financial Corporation
Capital Securities BBB a2 A
-----------------------------------------------------------------------------
Allmerica Financial Corporation
Short Term Debt A1+ P1 -
-----------------------------------------------------------------------------
First Allmerica Financial
Life Insurance Company
Short Term Debt A1+ P1 -
-----------------------------------------------------------------------------
First Allmerica Financial Life
Insurance Company Short Term
Insurance Financial Strength Rating A1+ P1 -
-----------------------------------------------------------------------------
TRANSFER AGENT
First Chicago Trust Company of New York
A Division of EquiServe, LP
525 Washington Boulevard
Jersey City, NJ 07303-2512
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>
