UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549



                                    FORM 8-K

                                 Current Report
                                   Pursuant to
                             Section 13 or 15(d) of
                       The Securities Exchange Act of 1934


      Date of Report (Date of Earliest Event Reported):  December 4, 1998



                         ALLMERICA FINANCIAL CORPORATION 
              (Exact name of Registrant as specified in its charter)



       Delaware                       1-13754                  04-3263626
(State or other jurisdic-    (Commission File Number)    (I.R.S. Employer I.D.
tion of Incorporation)                                            Number)





               440 Lincoln Street, Worcester, Massachusetts 01653
                     (Address of Principal Executive Offices)
                                     (Zip Code)

                         
                                  (508) 855-1000
              (Registrant's Telephone Number including area code)



                                Page 1 of 6 pages
                             Exhibit Index on page 4


Page 1



Item 5.  Other Events.

On December 4, 1998, Allmerica Financial Corporation announced that it has 
reached a settlement agreement in a class action lawsuit in connection with
the sale of life insurance policies issued by the Company from 1978 to May 31,
1998.  The settlement agreement is subject to a court determination that it is
fair and reasonable, and to court approval.  The fairness hearing is expected
to be held during the spring of next year.  A copy of the press release is 
attached as Exhibit 99 and is incorporated by reference herein.

Item 7.  Financial Statements and Exhibits.

Exhibit 99 

Press Release dated December 4, 1998, announcing Allmerica Financial
Corporation has reached a settlement agreement in a class action lawsuit in
connection with the sale of life insurance policies issued by the Company
from 1978 to May 31, 1998.  
























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SIGNATURES


Pursuant to the requirements of the Securities and Exchange Act of 1934, 
the registrant has duly caused this report to be signed on its behalf by the 
undersigned hereunto duly authorized.

                                                 ALLMERICA FINANCIAL
                                                 CORPORATION



                                                 By:/s/ Edward J. Parry III ,
                                                    Edward J. Parry III
                                                    Vice President, Chief
                                                    Financial Officer, and
                                                    Treasurer


Date:  December 7, 1998






















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Exhibit Index

Exhibit 99

Press Release dated December 4, 1998, announcing Allmerica Financial
Corporation has reached a settlement agreement in a class action lawsuit in
connection with the sale of life insurance policies issued by the Company 
from 1978 to May 31, 1998


































Page 4




                                   EXHIBIT 99

                        ALLMERICA FINANCIAL CORPORATION
                       ANNOUNCES CLASS ACTION SETTLEMENT


WORCESTER, Mass., December 4, 1998 - Allmerica Financial Corporation (NYSE: 
AFC) today announced that it has reached a settlement agreement in a class 
action lawsuit filed against Allmerica and three subsidiary companies in 
connection with the sale of life insurance policies issued by the company from
1978 to May 31, 1998. Approximately 450,000 policies are affected by the 
settlement.

 "Allmerica always has insisted on an adherence to the highest ethical 
standards of business conduct," said Allmerica President and Chief Executive 
Officer John F. O'Brien.  "We vigorously deny the allegations in the complaint
that we engaged in inappropriate sales practices. However, settlement of this
action at this time serves the interests of our policyholders, shareholders 
and the company. It will enable us to resolve this matter in a timely manner,
and to avoid the tremendous expense and distraction of protracted litigation."

The lawsuit is similar to many filed against other life insurers in recent 
years. In general, the lawsuits have been prompted by policyholder 
disappointment in their policies' performance, largely as a result of 
declining interest rates. Many insurers have settled these lawsuits, or are
currently involved in settlement negotiations.

The settlement agreement is subject to a court determination that it is fair 
and reasonable, and to court approval. The fairness hearing is expected to be
held during the Spring of next year. 

Under the agreement, Allmerica will provide benefits and remedies designed to
address the specific circumstances of individual policyholders. The company 
will extend to all class members the opportunity to purchase an annuity to 
which Allmerica will make contributions, or the opportunity to purchase a 
discounted life insurance product. Alternatively, relief may be available 
through an alternative dispute resolution process through which policyholders
who believe they were misled when they purchased a policy can seek benefits.
As part of that process, independent claims adjudicators will determine what,
if any benefits will be made available. The agreement must be approved by the
court before Allmerica can make benefits available to policyholders. 

Allmerica has established an extensive communications program to inform 
individuals of the agreement, to review their rights and the benefits
available to them, and to respond to questions from class members. During the
next several weeks, the company plans to mail informational packages to all 
class members and to open a toll-free call center to respond to policyholder
inquiries.

"Through our more than 150 years, Allmerica has been committed to serving the 
interests of our policyholders responsibly," said O'Brien. "This settlement is
consistent with that commitment, and will allow us to conclude this litigation
while offering important benefits to our policyholders. We look forward to 
focusing all of our energies and resources on helping our policyholders meet 
their future financial security needs."

Allmerica Financial is a diversified group of insurance and financial services
companies headquartered in Worcester, Mass. The Allmerica companies rank among
the country's 20 leading providers of variable insurance products and the 30 
largest providers of property and casualty coverage. The lead company in the 
group, Allmerica Financial Corporation, is a Fortune 500 company.


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AF-41
12/4/98



Contacts:     Investors:                   Media:
             Jean Peters               Mike Buckley
           (508) 855-3599             (508) 855-3099







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