-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PAE5Fw+Mxnthw7yFfxW9Om8oF/k26KCF1U7/3BjiaLufXLo2AjD1QKIDO8ITM+qM /IUSOum7GCw4/Wk9aculLA== 0000944695-00-000001.txt : 20000209 0000944695-00-000001.hdr.sgml : 20000209 ACCESSION NUMBER: 0000944695-00-000001 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLMERICA FINANCIAL CORP CENTRAL INDEX KEY: 0000944695 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 043263626 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13754 FILM NUMBER: 526522 BUSINESS ADDRESS: STREET 1: 440 LINCOLN ST CITY: WORCESTER STATE: MA ZIP: 01653 BUSINESS PHONE: 5088551000 MAIL ADDRESS: STREET 1: 440 LINCOLN ST CITY: WORCESTER STATE: MA ZIP: 01653 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): February 3, 2000 ALLMERICA FINANCIAL CORPORATION (Exact name of Registrant as specified in its charter) Delaware 1-13754 04-3263626 (State or other jurisdic- (Commission File Number) (I.R.S.Employer tion of Incorporation) I.D. Number) 440 Lincoln Street, Worcester, Massachusetts 01653 (Address of Principal Executive Offices) (Zip Code) (508) 855-1000 (Registrant's Telephone Number including area code) Page 1 of 39 pages Exhibit Index on page 4 Page 1 Item 5. Other Events. On February 3, 2000, Allmerica Financial Corporation announced its financial results for fourth quarter 1999. A copy of the press release and accompanying statistical supplement are attached as Exhibits 99 and 99.1 and are incorporated by reference herein. CAUTIONARY STATEMENT FOR THE PURPOSES OF THE `SAFE HARBOR' PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Forward-Looking Statements The Company wishes to caution readers that the following important factors, among others, in some cases have affected and in the future could affect, the Company's actual results and could cause the Company's actual results for 1999 and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. When used in the MD&A discussion, the words "believes", "anticipates", "expects" and similar expressions are intended to identify forward looking statements. See "Important Factors Regarding Forward-Looking Statements" filed as Exhibit 99-2 to the Company's June 30, 1999 Form 10-Q. Factors that may cause actual results to differ materially from those contemplated or projected, forecast, estimated or budgeted in such forward looking statements include among others, the following possibilities: (i) adverse catastrophe experience and severe weather; (ii) adverse loss development for events the Company insured in prior years or adverse trends in mortality and morbidity; (iii) heightened competition, including the intensification of price competition, the entry of new competitors, and the introduction of new products by new and existing competitors; (iv) adverse state and federal legislation or regulation, including decreases in rates, limitations on premium levels, increases in minimum capital and reserve requirements, benefit mandates, limitations on the ability to manage care and utilization, and tax treatment of insurance and annuity products; as well as continued compliance with state and federal regulations; (v) changes in interest rates causing a reduction of investment income or in the market value of interest rate sensitive investments; (vi) failure to obtain new customers, retain existing customers or reductions in policies in force by existing customers; (vii) higher service, administrative, or general expense due to the need for additional advertising, marketing, administrative or management information systems expenditures; (viii) loss or retirement of key executives; (ix) increases in medical costs, including increases in utilization, costs of medical services, pharmaceuticals, durable medical equipment and other covered items; (x) termination of provider contracts or renegotiations at less cost-effective rates or terms of payment; (xi) changes in the Company's liquidity due to changes in asset and liability matching; (xii) restrictions on insurance underwriting, based on genetic testing and other criteria; (xiii) adverse changes in the ratings obtained from independent rating agencies, such as Moody's, Standard and Poor's, A.M. Best, and Duff & Phelps; (xiv) lower appreciation on and decline in value of managed investments, resulting in reduced variable products, assets and related fees; (xv) possible claims relating to sales practices for insurance products; (xvi) uncertainty related to the Year 2000 issue; (xvii) failure of a reinsurer of the Company's policies to pay its liabilities under reinsurance contracts; (xviii) earlier than expected withdrawals from the Company's general account annuities, GICs (including funding agreements), and other insurance products; (xix) changes in the mix of assets comprising the Company's investment portfolio and the fluctuation of the market value of such assets; and (xx) losses resulting from the Company's participation in certain reinsurance pools. Item 7. Financial Statements and Exhibits. Exhibit 99 Press Release dated February 3, 2000, announcing Allmerica Financial Corporation fourth quarter 1999 financial results. Exhibit 99.1 Allmerica Financial Corporation Fourth Quarter Statistical Supplement. Page 2 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ALLMERICA FINANCIAL CORPORATION By: /S/Edward J. Parry III Edward J. Parry III Vice President, Chief Financial Officer, and Treasurer Date: February 7, 2000 Page 3 Exhibit Index Exhibit 99 Press Release dated February 3, 2000, announcing Allmerica Financial Corporation fourth quarter 1999 financial results. Exhibit 99.1 Allmerica Financial Corporation Fourth Quarter Statistical Supplement. Page 4 EXHIBIT 99 ALLMERICA FINANCIAL CORPORATION REPORTS RECORD OPERATING EARNINGS OF $5.06 PER SHARE FOR 1999 WORCESTER, Mass., February 3, 2000 - Allmerica Financial Corporation (NYSE: AFC) today reported record operating earnings from continuing operations for the fourth quarter and full-year 1999. Fourth quarter highlights: Net operating income per share from continuing operations was $1.48, or $80.8 million, an increase in earnings per share of 32.1 percent compared to $1.12 per share, or $67.1 million in 1998. Net operating income from continuing operations excludes net realized investment gains and losses and other non-recurring gains and charges, net of taxes. Return on equity increased substantially in 1999 to 12.3 percent versus 9.4 percent in 1998. Asset Accumulation pre-tax operating earnings were $59.5 million, up 18.5 percent from $50.2 million for the same period in 1998. Variable annuity sales were $653.0 million, an increase of 2.8 percent over sales in the third quarter of 1999. Risk Management pre-tax operating earnings were $65.0 million, up from the $52.4 million reported in the fourth quarter of 1998. Net income was $68.4 million, or $1.25 per share, compared to $65.9 million, or $1.10 per share in 1998. Full-year highlights: Net operating income per share from continuing operations was $5.06, or $280.9 million, an increase in earnings per share of 43.8 percent compared to $3.52 per share or $212.5 million in 1998. Net operating income per share from continuing operations has grown at a 29 percent cumulative average growth rate since going public in 1995. Asset Accumulation pre-tax operating income was $229.0 million, an 18.8 percent increase from $192.7 million in 1998. Risk Management pre-tax operating income for the year was $199.6 million, up 33.4 percent from $149.6 million for the full year 1998. 1999 net income was $295.8 million, or $5.33 per share, up from $201.2 million, or $3.33 per share in 1998. "Our fifth consecutive year of record earnings and significant improvement in our return on equity confirm the soundness of our operating strategies," said John F. O'Brien, president and chief executive officer of Allmerica Financial Corporation. "1999's results extended our impressive record of earnings growth which began with our initial public offering in 1995. Since we became a public company, we have delivered average annual operating earnings growth of 29 percent. We are confident our strategies will continue to deliver value to our shareholders in 2000 and beyond." Segment Results Allmerica Financial operates in two primary businesses: Asset Accumulation and Risk Management. The Asset Accumulation business markets insurance and retirement savings products and services to individual and institutional clients through Allmerica Financial Services, and investment management services to institutions, pension funds, and other organizations through Allmerica Asset Management, Inc. Risk Management markets property and casualty insurance products on a regional basis through The Hanover Insurance Company and Citizens Insurance Company of America. Asset Accumulation Fourth quarter pre-tax operating earnings for the Asset Accumulation business increased to $59.5 million from $50.2 million in 1998. Full-year Asset Accumulation pre-tax operating earnings increased 18.8 percent, to $229.0 million, compared to $192.7 million in 1998. Allmerica Financial Services' pre-tax operating earnings increased to $54.2 million in the quarter, up from $43.5 million in the fourth quarter of 1998. Full-year pre-tax operating earnings were $205.5 million in 1999, up 21.6 percent from $169.0 million in 1998. Allmerica Asset Management's fourth quarter pre-tax operating earnings were $5.3 million, down from $6.7 million in the same period in the prior year. Full-year pre-tax operating earnings in 1999 were $23.5 million, compared to $23.7 million in 1998. Asset Accumulation highlights: Variable annuity sales were $2.8 billion in 1999 versus $3.2 billion in 1998. Variable annuity sales in the fourth quarter of 1999 were $653.0 million, a 2.8% increase over sales in the third quarter of 1999. Variable product assets increased to $17.6 billion at December 31, 1999 up 28.5 percent from $13.7 billion in 1998. Variable product fees of $79.7 million were up 28.5 percent over the 1998 fourth quarter, and up 29.2 percent for the year to $291.2 million. Increased fees are related to variable product asset growth resulting from sales and stock market appreciation. Variable life insurance sales were up 21.7 percent, to $52.2 million in the quarter, and increased 17.8 percent, to $187.0 million for the full-year 1999. Risk Management Risk Management pre-tax operating earnings were $65.0 million, compared to $52.4 million for the fourth quarter of 1998. Pre-tax catastrophe losses were $3.8 million in the quarter, versus $7.9 million in 1998. Full-year Risk Management pre-tax operating earnings were $199.6 million in 1999, compared to $149.6 million in 1998. Pre-tax catastrophe losses were $76.9 million in 1999, compared to $90.3 million in 1998. Risk Management highlights: Direct written premiums increased 6.4 percent in the fourth quarter of 1999 to $519.8 million from $488.4 million in the fourth quarter of 1998. Full year direct written premiums increased 10.0 percent in 1999 to $2.2 billion compared to $2.0 billion in 1998. The statutory expense ratio was 28.5 percent in the quarter, down from 28.9 percent in the same period in 1998. The full-year statutory expense ratio was 28.5 percent in both 1999 and 1998. Corporate Corporate segment net expenses were $16.1 million in the fourth quarter of 1999, compared to $15.3 million in 1998. Full-year corporate net expenses were $59.3 million and $50.9 million in 1999 and 1998, respectively. Investment Results Net investment income was $145.9 million for the fourth quarter of 1999, compared to $157.0 million in the same period in 1998. This decrease is due to lower average invested assets, primarily resulting from the timing of share repurchases and other capital transactions during the period. Full-year 1999 net investment income was $615.7 million, compared to $604.4 million in 1998. Fourth quarter net realized investment losses were $15.5 million, compared to $10.1 million of net realized investment gains in 1998. Full-year 1999 net realized investment gains were $91.0 million, up from $59.2 million in 1998. During 1999, realized gains related principally to the sale of appreciated equities in the property and casualty investment portfolio. Balance Sheet Shareholders' equity was $2.2 billion, or $41.32 per share at December 31, 1999, compared to $2.5 billion, or $41.95 per share at December 31, 1998. Excluding the impact of SFAS No. 115, book value was $42.71 per share at the close of the fourth quarter, compared to $38.87 per share at December 31, 1998. Total assets were $30.8 billion at December 31, 1999, up from $27.7 billion at year-end 1998. Interim information is unaudited. Allmerica Financial Corporation is the holding company for a diversified group of insurance and financial services companies headquartered in Worcester, Massachusetts. CONTACTS: Investors Media Henry P. St. Cyr Michael F. Buckley (508) 855-2959 (508) 855-3099 ALLMERICA FINANCIAL CORPORATION
(In millions, except per share data) Quarter ended Year ended December 31 December 31 1999 1998 1999 1998 Net income $68.4 $65.9 $295.8 $201.2 Net income per share $1.25 $1.10 $ 5.33 $ 3.33 Weighted average shares 54.6 59.9 55.5 60.3
The following is a reconciliation from net operating income to net income per share:
PER SHARE DATA (DILUTED) Quarter ended Year ended December 31 December 31 1999 1998 1999 1998 Net operating income $1.48 $1.12 $5.06 $3.52 Net realized (losses) gains on investments, net of taxes, minority interest and amortization (0.25) 0.11 1.13 0.48 Loss from operations of discontinued business, net of taxes 0.00 (0.03) (0.33) (0.23) Loss on disposal of group life and health business, net of taxes 0.00 0.00 (0.55) 0.00 Sales practice litigation expense, net of taxes 0.00 0.00 0.00 (0.33) Restructuring charges, net of taxes and minority interest 0.02 (0.10) 0.02 (0.10) Other non-operating items, net of taxes 0.00 0.00 0.00 (0.01) -------------- -------------- Net income $1.25 $1.10 $5.33 $3.33 -------------- -------------- Net operating income excludes net realized gains and losses and other items which management believes are not indicative of overall operating trends, all net of taxes and minority interest. Basic net income per share was $1.26 and $1.11 for the quarters ended December 31, 1999 and 1998, respectively, and $5.38 and $3.36 for the years ended December 31, 1999 and 1998, respectively.
All figures reported are unaudited and are in accordance with generally accepted accounting principles. Exhibit 99.1 ALLMERICA FINANCIAL CORPORATION STATISTICAL SUPPLEMENT TABLE OF CONTENTS Financial Highlights 1 - 3 Consolidated Financial Statements Income Statements 4 Balance Sheets 5 Shareholders' Equity 6 Segment Results Income Statement Highlights 7 Historical Income Statement Highlights 8 Balance Sheet Highlights 9 Risk Management Condensed Income Statements 10 Selected Financial Information by Distribution Channel 11 - 16 Property and Casualty Selected Financial Information and Supplemental Data 17 Selected Statutory Financial Information 18 Asset Accumulation Allmerica Financial Services Condensed Income Statements 19 Operating Income by Product Line 20 - 21 Premiums, Deposits and Other Income 22 Future Policy Benefits and Account Balances 23 Allmerica Asset Management Condensed Income Statements and Supplemental Information 24 Corporate Condensed Income Statements 25 Investment Results Net Investment Income, Including Closed Block 26 Historical Financial Highlights 27 - 29 Other Information Corporate Information Inside back cover Market and Dividend Information Industry Ratings ALLMERICA FINANCIAL CORPORATION FINANCIAL HIGHLIGHTS QUARTER ENDED DECEMBER 31, 1999 Fourth Quarter Highlights: Net operating income per share from continuing operations was $1.48, or $80.8 million, an increase in earnings per share of 32.1 percent compared to $1.12 per share, or $67.1 million in 1998. Net operating income from continuing operations excludes net realized investment gains and losses and other non-recurring gains and charges, net of taxes. Return on equity increased substantially in 1999 to 12.3 percent versus 9.4 percent in 1998. Asset Accumulation pre-tax operating earnings were $59.5 million, up 18.5 percent from $50.2 million for the same period in 1998. Variable annuity sales were $653.0 million, an increase of 2.8 percent over sales in the third quarter of 1999. Risk Management pre-tax operating earnings were $65.0 million, up from the $52.4 million reported in the fourth quarter of 1998. Net income was $68.4 million, or $1.25 per share, compared to $65.9 million, or $1.10 per share in 1998. Full-year Highlights: Net operating income per share from continuing operations was $5.06, or $280.9 million, an increase in earnings per share of 43.8 percent compared to $3.52 per share or $212.5 million in 1998. Net operating income per share from continuing operations has grown at a 29 percent cumulative average growth rate since going public in 1995. Asset Accumulation pre-tax operating income was $229.0 million, an 18.8 percent increase from $192.7 million in 1998. Risk Management pre-tax operating income for the year was $199.6 million, up 33.4 percent from $149.6 million for the full year 1998. 1999 net income was $295.8 million, or $5.33 per share, up from $201.2 million, or $3.33 per share in 1998. Page 1 ALLMERICA FINANCIAL CORPORATION FINANCIAL HIGHLIGHTS
Quarter ended Year ended December 31 December 31 (In millions, except % % per share data) 1999 1998 Change 1999 1998 Change INCOME STATEMENT Revenues Premiums $497.6 $491.6 1.2 $1,950.5 $1,970.6 (1.0) Universal life and investment product policy fees 96.4 79.4 21.4 359.3 296.6 21.1 Net investment income 145.9 157.0 (7.1) 615.7 604.4 1.9 Net realized investment (losses) gains (15.5) 10.1 N/M 91.0 59.2 53.7 Other income 38.1 30.8 23.7 128.7 103.2 24.7 -------------------- ------------------------- Total revenues $762.5 $768.9 (0.8) $3,145.2 $3,034.0 3.7 ==================== ========================= RECONCILIATION FROM NET OPERATING INCOME TO NET INCOME Net operating income $ 80.8 $ 67.1 20.4 $ 280.9 $ 212.5 32.2 Net realized investment (losses) gains, net of taxes, minority interest and amortization (13.6) 6.4 N/M 63.0 28.8 N/M Other non-operating items, net of taxes 1.2 (5.8) N/M 1.2 (26.6) N/M ------------------- ---------------------- Income from continuing operations 68.4 67.7 1.0 345.1 214.7 60.7 Loss from operations of discontinued business, net of taxes 0.0 (1.8) N/M (18.8) (13.5) 39.3 Loss on disposal of group life and health business, net of taxes 0.0 0.0 0.0 (30.5) 0.0 N/M -------------------- ----------------------- Net income $ 68.4 $ 65.9 3.8 $ 295.8 $ 201.2 47.0 ==================== ========================= PER SHARE DATA (DILUTED) Net operating income $ 1.48 $ 1.12 32.1 $ 5.06 $ 3.52 43.8 Net realized investment (losses) gains, net of taxes, minority interest and amortization (0.25) 0.11 N/M 1.13 0.48 N/M Other non-operating items, net of taxes 0.02 (0.10) N/M 0.02 (0.44) N/M -------------------- ------------------------ Income from continuing operations 1.25 1.13 10.6 6.21 3.56 74.4 Loss from operations of discontinued business, net of taxes 0.0 (0.03) N/M (0.33) (0.23) 43.5 Loss on disposal of group life and health business, net of taxes 0.0 0.0 0.0 (0.55) 0.0 N/M -------------------- ------------------------ Net income $ 1.25 $ 1.10 13.6 $ 5.33 $ 3.33 60.1 ==================== ======================== Dividends declared to shareholders $ 0.00 $ 0.00 $ 0.25 $ 0.15 Weighted average shares outstanding 54.6 59.9 55.5 60.3 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. Basic net income per share was $1.26 and $1.11 for the quarters ended December 31, 1999 and 1998, respectively, and $5.38 and $3.36 for the years ended December 31, 1999 and 1998, respectively.
N/M - Not meaningful Page 2 ALLMERICA FINANCIAL CORPORATION FINANCIAL HIGHLIGHTS
(In millions, except per share December 31 December 31 data and ratios) 1999 1998 % Change BALANCE SHEET Total investments $ 7,888.7 $ 9,057.6 (12.9) Separate account assets $17,629.6 $13,697.7 28.7 Total assets $30,769.6 $27,653.1 11.3 Total liabilities $28,229.4 $24,894.5 13.4 Minority interest: Mandatorily redeemable preferred securities of a subsidiary trust $ 300.0 $ 300.0 0.0 Shareholders' equity $ 2,240.2 $ 2,458.6 (8.9) Statutory surplus: Property and casualty insurance companies $ 1,089.0 $ 1,269.3 (14.3) Life and health insurance companies $ 590.2 $ 1,164.1 (49.3) Book value per share $ 41.32 $ 41.95 (1.5) Book value per share, excluding SFAS No. 115 $ 42.71 $ 38.87 9.9 Shares outstanding 54.2 58.6 Stock price $ 55.63 $ 57.88 (3.9) Price/book value per share 1.3 x 1.4 x (0.1) x Debbt/equity 8.9 % 8.1 % 0.8 pts Debt/total capital 7.3 % 6.7 % 0.6 pts Debt plus preferred securities of a subsidiary trust/total capital 18.2 % 16.9 % 1.3 pts Shares outstanding do not include common stock equivalents.
Quarter ended Year ended December 31 December 31 (In millions, except % % ratios) 1999 1998 Change 1999 1998 Change RISK MANAGEMENT Net premiums written: Personal lines $279.8 $274.2 2.0 $1,197.2 $1,208.1 (0.9) Commercial lines 191.9 181.4 5.8 779.8 748.6 4.2 ---------------------- ------------------------- Total Risk Management $471.7 $455.6 3.5 $1,977.0 $1,956.7 1.0 ---------------------- ------------------------- Statutory underwriting income (loss) $ 14.2 $ (2.5) N/M $ (31.2) $ (87.6)(64.4) Incurred catastrophe losses $ 3.8 $ 7.9 (51.9) $ 76.9 $ 90.3 (14.8) PROPERTY AND CASUALTY RATIOS Losses 60.9% 64.7% (3.8) pts 63.8% 67.4% (3.6) pts Loss adjustment expenses 8.4% 8.2% 0.2 pts 8.4% 8.1% 0.3 pts Other underwriting expenses 28.5% 28.9% (0.4) pts 28.5% 28.5% 0.0 pts Policyholder dividends 0.8% 0.8% 0.0 pts 0.5% 0.6% (0.1) pts Statutory combined ratio 98.6% 102.6% (4.0) pts 101.2% 104.6% (3.4) pts Catastrophe points on combined ratio 0.8 1.6 (0.8) pts 3.9 4.6 (0.7) pts
Page 3 ALLMERICA FINANCIAL CORPORATION CONSOLIDATED INCOME STATEMENTS
Quarter ended Year ended December 31 December 31 (In millions, except % % per share data) 1999 1998 Change 1999 1998 Change REVENUES Premiums $497.6 $491.6 1.2 $1,950.5 $1,970.6 (1.0) Universal life and investment product policy fees 96.4 79.4 21.4 359.3 296.6 21.1 Net investment income 145.9 157.0 (7.1) 615.7 604.4 1.9 Net realized investment (losses) gains (15.5) 10.1 N/M 91.0 59.2 53.7 Other income 38.1 30.8 23.7 128.7 103.2 24.7 -------------------- ------------------------- Total revenues 762.5 768.9 (0.8) 3,145.2 3,034.0 3.7 -------------------- ------------------------- BENEFITS, LOSSES AND EXPENSES Policy benefits, claims, losses and loss adjustment expenses 435.5 439.6 (0.9) 1,770.7 1,804.0 (1.8) Policy acquisition expenses 113.4 108.0 5.0 429.9 449.6 (4.4) Sales practice litigation expense 0.0 0.0 0.0 0.0 31.0 N/M Restructuring costs (1.9) 9.0 N/M (1.9) 9.0 N/M Other operating expenses 120.3 122.4 (1.7) 478.5 440.3 8.7 -------------------- ------------------------- Total benefits, losses and expenses 667.3 679.0 (1.7) 2,677.2 2,733.9 (2.1) -------------------- ------------------------- Income from continuing operations before federal income taxes 95.2 89.9 5.9 468.0 300.1 55.9 Federal income tax expense 22.8 16.2 40.7 106.9 56.1 90.6 -------------------- ------------------------- Income from continuing operations before minority interest 72.4 73.7 (1.8) 361.1 244.0 48.0 -------------------- ------------------------- Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust (4.0) (4.0) 0.0 (16.0) (16.0) 0.0 Equity in earnings 0.0 (2.0) N/M 0.0 (13.3) N/M -------------------- ------------------------- (4.0) (6.0)(33.3) (16.0) (29.3)(45.4) -------------------- ------------------------- Income from continuing operations 68.4 67.7 1.0 345.1 214.7 60.7 Loss from operations of discontinued business (less applicable income taxes (benefit) of $(0.8) for the quarter ended December 31, 1998, and $(10.1) and $(7.0) for the years ended December 31, 1999 and 1998) 0.0 (1.8) N/M (18.8) (13.5) 39.3 Loss on disposal of group life and health business, including provision of $72.2 for operating losses during phase-out period for the year ended December 31, 1999 (less applicable income taxes (benefit) of $(16.4)) 0.0 0.0 0.0 (30.5) 0.0 N/M -------------------- ------------------------- Net income $ 68.4 $ 65.9 3.8 $ 295.8 $ 201.2 47.0 ==================== ========================= PER SHARE DATA (DILUTED) Income from continuing operations $ 1.25 $ 1.13 10.6 $ 6.21 $ 3.56 74.4 -------------------- ------------------------- Loss from operations of discontinued business (less applicable income taxes (benefit) of $(0.01) for the quarter ended December 31, 1998, and $(0.19) and $(0.12) for the years ended December 31, 1999 and 1998 0.00 (0.03) N/M (0.33) (0.23) 43.5 Loss on disposal of group life and health business, including provision of $1.30 for operating losses during phase-out period for the year ended December 31, 1999, (less applicable income taxes (benefit) of $(0.29) for the year ended December 31, 1999) 0.00 0.00 0.0 (0.55) 0.00 N/M -------------------- ------------------------- Net income $ 1.25 $ 1.10 13.6 $ 5.33 $ 3.33 60.1 ==================== ========================= Dividends declared to shareholders $ 0.00 $ 0.00 $ 0.25 $ 0.15 =============== ================== Weighted average shares outstanding 54.6 59.9 55.5 60.3 ============== =================== Basic net income per share was $1.26 and $1.11 for the quarters ended December 31, 1999 and 1998, respectively, and $5.38 and $3.36 for the years ended December 31, 1999 and 1998, respectively.
Page 4 ALLMERICA FINANCIAL CORPORATION CONSOLIDATED BALANCE SHEETS
December 31 December 31 (In millions, except per share data) 1999 1998 % Change ASSETS Investments: Debt securities, at fair value (Amortized cost of $7,095.0 and $7,618.2) $ 6,933.8 $ 7,780.8 (10.9) Equity securities, at fair value (Cost of $49.5 and $253.1) 83.2 397.1 (79.0) Mortgage loans 521.2 562.3 (7.3) Policy loans 170.5 154.3 10.5 Real estate and other long-term investments 180.0 163.1 10.4 -------------------------------- Total investments 7,888.7 9,057.6 (12.9) -------------------------------- Cash and cash equivalents 442.2 550.3 (19.6) Accrued investment income 134.7 142.3 (5.3) Premiums, accounts and notes receivable, net 583.5 555.7 5.1 Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums 1,279.9 1,136.0 12.7 Deferred policy acquisition costs 1,386.8 1,161.2 19.4 Deferred federal income taxes 141.7 19.8 N/M Other assets 510.2 529.4 (3.6) Closed Block assets 772.3 803.1 (3.8) Separate account assets 17,629.6 13,697.7 28.7 -------------------------------- Total assets $30,769.6 $27,653.1 11.3 ================================ LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Policy liabilities and accruals: Future policy benefits $ 2,825.0 $ 2,802.2 0.8 Outstanding claims, losses and loss adjustment expenses 2,838.6 2,816.3 0.8 Unearned premiums 890.2 843.2 5.6 Contractholder deposit funds and other policy liabilities 2,041.0 2,637.0 (22.6) -------------------------------- Total policy liabilities and accruals 8,594.8 9,098.7 (5.5) -------------------------------- Expenses and taxes payable 795.5 716.1 11.1 Reinsurance premiums payable 73.0 95.4 (23.5) Trust instruments supported by funding obligations 50.6 0.0 N/M Short-term debt 45.0 221.3 (79.7) Long-term debt 199.5 199.5 0.0 Closed Block liabilities 842.1 872.0 (3.4) Separate account liabilities 17,628.9 13,691.5 28.8 -------------------------------- Total liabilities 28,229.4 24,894.5 13.4 -------------------------------- MINORITY INTEREST Mandatorily redeemable preferred securities of a subsidiary trust 300.0 300.0 0.0 SHAREHOLDERS' EQUITY Preferred stock, par value $.01 per share; authorized 20.0 million shares; issued none 0.0 0.0 0.0 Common stock, par value $.01 per share; authorized 300.0 million shares; issued 60.4 million shares 0.6 0.6 0.0 Additional paid-in capital 1,770.5 1,768.8 0.1 Accumulated other comprehensive income (75.3) 180.5 N/M Retained earnings 882.2 599.9 47.1 Treasury stock at cost (6.2 and 1.8 million shares) (337.8) (91.2) N/M -------------------------------- Total shareholders' equity 2,240.2 2,458.6 (8.9) -------------------------------- Total liabilities and shareholders' equity $30,769.6 27,653.1 11.3 ================================
Page 5 ALLMERICA FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Year ended December 31 (In millions) 1999 1998 PREFERRED STOCK Balance at beginning and end of period $ 0.0 $ 0.0 ----------------------- COMMON STOCK Balance at beginning and end of period 0.6 0.6 ----------------------- ADDITIONAL PAID-IN CAPITAL Balance at beginning of period 1,768.8 1,755.0 Issuance of common stock 1.7 13.8 ----------------------- Balance at end of period 1,770.5 1,768.8 ----------------------- ACCUMULATED OTHER COMPREHENSIVE INCOME NET UNREALIZED APPRECIATION ON INVESTMENTS Balance at beginning of period 180.5 217.9 Net depreciation on available-for-sale securities (393.8) (82.7) Benefit for deferred federal income taxes 138.0 28.8 Minority interest 0.0 16.5 ----------------------- Balance at end of period (75.3) 180.5 ----------------------- RETAINED EARNINGS Balance at beginning of period 599.9 407.8 Net income 295.9 201.2 Dividends to shareholders (13.6) (9.1) ----------------------- Balance at end of period 882.2 599.9 ----------------------- TREASURY STOCK Balance at beginning of period (91.2) 0.0 Shares purchased at cost (250.2) (91.2) Shares reissued at cost 3.6 0.0 ----------------------- Balance at end of period (337.8) (91.2) ----------------------- Total shareholders' equity $2,240.2 $2,458.6 =======================
Page 6 ALLMERICA FINANCIAL CORPORATION SEGMENT RESULTS INCOME STATEMENT HIGHLIGHTS
Quarter ended Year ended December 31 December 31 (In millions, except % % per share data) 1999 1998 Change 1999 1998 Change OPERATING REVENUES Risk Management Hanover North $191.2 $174.0 9.9 $ 733.1 $ 692.4 5.9 Hanover South 58.4 57.2 2.1 224.9 241.0 (6.7) Citizens Midwest 145.5 154.0 (5.5) 587.6 616.1 (4.6) Voluntary Benefits 145.4 146.6 (0.8) 573.5 576.1 (0.5) Allmerica Specialty 15.1 19.5 (22.6) 69.5 63.3 9.8 Other (0.4) 3.4 N/M 0.8 33.2 (97.6) -------------------------------------------------- 555.2 554.7 0.1 2,189.4 2,222.1 (1.5) -------------------------------------------------- Asset Accumulation Allmerica Financial Services 189.5 167.3 13.3 714.8 625.6 14.3 Allmerica Asset Management 34.2 35.1 (2.6) 150.5 121.7 23.7 -------------------------------------------------- 223.7 202.4 10.5 865.3 747.3 15.8 -------------------------------------------------- Corporate 1.1 3.0 (63.3) 6.0 12.9 (53.5) Eliminations and other (1.6) (1.7) (5.9) (5.9) (7.6) (22.4) -------------------------------------------------- Total operating revenues $778.4 $758.4 2.6 $3,054.8 $2,974.7 2.7 ================================================== NET OPERATING INCOME BEFORE TAXES AND MINORITY INTEREST Risk Management Hanover North $ 31.8 $ 21.6 47.2 $ 92.5 $ 49.7 86.1 Hanover South 3.8 4.8 (20.8) 14.2 16.2 (12.3) Citizens Midwest 21.8 14.4 51.4 69.1 30.8 N/M Voluntary Benefits 15.7 21.2 (25.9) 41.2 60.7 (32.1) Allmerica Specialty (3.9) (2.2) 77.3 (2.5) 1.6 N/M Other (4.2) (7.4) (43.2) (14.9) (9.4) 58.5 -------------------------------------------------- 65.0 52.4 24.0 199.6 149.6 33.4 -------------------------------------------------- Asset Accumulation Allmerica Financial Services 54.2 43.5 24.6 205.5 169.0 21.6 Allmerica Asset Management 5.3 6.7 (20.9) 23.5 23.7 (0.8) -------------------------------------------------- 59.5 50.2 18.5 229.0 192.7 18.8 -------------------------------------------------- Corporate (16.1) (15.3) 5.2 (59.3) (50.9) 16.5 -------------------------------------------------- Total net operating income before federal income taxes and minority interest 108.4 87.3 24.2 369.3 291.4 26.7 Federal income taxes on operating income (23.6) (13.8) 71.0 (72.4) (53.1) 36.3 Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust (4.0) (4.0) 0.0 (16.0) (16.0) 0.0 Equity in earnings 0.0 (2.4) N/M 0.0 (9.8) N/M -------------------------------------------------- Consolidated net operating income $ 80.8 $ 67.1 20.4 $ 280.9 $ 212.5 32.2 ================================================= Consolidated net operating income per share (diluted) $ 1.48 $ 1.12 32.1 $ 5.06 $ 3.52 43.8 ================================================= Weighted average shares outstanding (diluted) 54.6 59.9 55.5 60.3 =============== ================= Operating revenues exclude net realized gains and losses and other items which management believes are not indicative of overall operating trends. Includes results from certain property and casualty business which the Company has exited, as well as purchase accounting adjustments. 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.
Page 7 ALLMERICA FINANCIAL CORPORATION SEGMENT RESULTS HISTORICAL INCOME STATEMENT HIGHLIGHTS
Year ended December 31 (In millions, except per share data) 1999 1998 1997 1996 1995 OPERATING REVENUES Risk Management $2,189.4 $2,222.1 $2,227.6 $2,160.4 $2,106.3 ------------------------------------------------- Asset Accumulation Allmerica Financial Services 714.8 625.6 610.0 595.0 639.5 Allmerica Asset Management 150.5 121.7 91.1 110.5 157.6 ------------------------------------------------- 865.3 747.3 701.1 705.5 797.1 ------------------------------------------------- Corporate 6.0 12.9 16.1 6.9 (2.4) Eliminations and other (5.9) (7.6) (11.5) (12.7) (4.4) ------------------------------------------------- Total operating revenues $3,054.8 $2,974.7 $2,933.3 $2,860.1 $2,896.6 ================================================ NET OPERATING INCOME BEFORE TAXES AND MINORITY INTEREST 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 ================================================= Operating revenues exclude net realized gains and losses and other items which management believes are not indicative of overall operating trends. 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.
Page 8 ALLMERICA FINANCIAL CORPORATION SEGMENT RESULTS BALANCE SHEET HIGHLIGHTS
December 31, 1999 Asset Accumulation -------------------- Allmerica Allmerica Risk Financial Asset (In millions) Management Services Management Corporate Total Cash and investments $ 3,627.3 $ 3,264.2 $ 1,367.4 $ 72.0 $ 8,330.9 Reinsurance receivables 946.6 333.3 0.0 0.0 1,279.9 Deferred policy acquisition costs 173.3 1,213.1 0.4 0.0 1,386.8 Separate account assets 0.0 17,629.6 0.0 0.0 17,629.6 Other assets 1,121.8 223.2 19.8 5.3 1,370.1 Closed Block assets 0.0 772.3 0.0 0.0 772.3 ------------------------------------------------------ Total assets $ 5,869.0 $23,435.7 $ 1,387.6 $ 77.3 $30,769.6 ====================================================== Policy liabilities and accruals: Future policy benefits $ 183.5 $ 2,641.5 $ 0.0 $ 0.0 $ 2,825.0 Outstanding claims, losses and loss adjustment expenses 2,820.3 18.3 0.0 0.0 2,838.6 Unearned premiums 887.2 3.0 0.0 0.0 890.2 Contractholder deposit funds and other policy liabilities 24.8 700.2 1,316.0 0.0 2,041.0 ------------------------------------------------------ Total policy liabilities and accruals $ 3,915.8 $ 3,363.0 $ 1,316.0 $ 0.0 $ 8,594.8 ====================================================== Separate account liabilities $ 0.0 $17,628.9 $ 0.0 $ 0.0 $17,628.9 ====================================================== Closed Block liabilities $ 0.0 $ 842.1 $ 0.0 $ 0.0 $ 842.1 ======================================================
December 31, 1998 Asset Accumulation -------------------- Allmerica Allmerica Risk Financial Asset (In millions) Management Services Management Corporate Total Cash and investments $ 4,304.9 $ 3,357.9 $ 1,786.4 $158.7 $ 9,607.9 Reinsurance receivables 797.5 338.5 0.0 0.0 1,136.0 Deferred policy acquisition costs 167.5 993.1 0.6 0.0 1,161.2 Separate account assets 0.0 13,697.7 0.0 0.0 13,697.7 Other assets 949.1 271.5 23.9 2.7 1,247.2 Closed Block assets 0.0 803.1 0.0 0.0 803.1 ------------------------------------------------------ Total assets $ 6,219.0 $19,461.8 $ 1,810.9 $161.4 $27,653.1 ====================================================== Policy liabilities and accruals: Future policy benefits $ 158.0 $ 2,644.2 $ 0.0 $ 0.0 $ 2,802.2 Outstanding claims, losses and loss adjustment expenses 2,797.4 18.9 0.0 0.0 2,816.3 Unearned premiums 840.1 3.1 0.0 0.0 843.2 Contractholder deposit funds and other policy liabilities 21.4 823.8 1,791.8 0.0 2,637.0 ------------------------------------------------------ Total policy liabilities and accruals $ 3,816.9 $ 3,490.0 $1,791.8 $ 0.0 $ 9,098.7 ====================================================== Separate account liabilities $ 0.0 $13,691.5 $ 0.0 $ 0.0 $13,691.5 ====================================================== Closed Block liabilities $ 0.0 $ 872.0 $ 0.0 $ 0.0 $ 872.0 ======================================================
Page 9 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT CONDENSED INCOME STATEMENTS
Quarter ended Year ended December 31 December 31 % (In millions) 1999 1998 Change 1999 1998 Change REVENUES Net premiums written $471.7 $455.6 3.5 $1,977.0 $1,956.7 1.0 Change in unearned premiums, net of prepaid reinsurance premiums 24.7 34.7 (28.8) (28.8) 11.2 N/M --------------------------------------------------- Net premiums earned 496.4 490.3 1.2 1,948.2 1,967.9 (1.0) Net investment income 53.6 58.3 (8.1) 221.4 229.8 (3.7) Other income 5.2 6.1 (14.8) 19.8 24.4 (18.9) --------------------------------------------------- Total operating revenue 555.2 554.7 0.1 2,189.4 2,222.1 (1.5) --------------------------------------------------- LOSSES AND OPERATING EXPENSES Policy benefits, claims, losses and loss adjustment expenses 350.6 358.8 (2.3) 1,420.3 1,495.4 (5.0) Policy acquisition expenses 94.4 92.0 2.6 370.6 379.7 (2.4) Other operating expenses 45.2 51.5 (12.2) 198.9 197.4 0.8 --------------------------------------------------- Total losses and operating expenses 490.2 502.3 (2.4) 1,989.8 2,072.5 (4.0) --------------------------------------------------- Net operating income before taxes 65.0 52.4 24.0 199.6 149.6 33.4 Net realized investment (losses) gains (6.0) (1.8) N/M 102.5 41.4 N/M Restructuring costs 1.9 (9.0) N/M 1.9 (9.0) N/M --------------------------------------------------- Net income before taxes $ 60.9 $ 41.6 46.4 $ 304.0 $ 182.0 67.0 ===================================================
The Risk Management Segment manages its products through five distribution channels identified as Hanover North, Hanover South, Citizens Midwest, Allmerica Voluntary Benefits, and Allmerica Specialty. Hanover North, Hanover South and Citizens Midwest sell property & casualty insurance products through independent agents primarily in the Northeast, Midwest and Southeast United States maintaining a strong regional focus. Allmerica Voluntary Benefits focuses on worksite distribution, which offers discounted property & casualty (auto and homeowners) insurance through employer sponsored programs. This distribution channel also offers products to members of affinity groups and other organizations. Allmerica Voluntary Benefits utilizes the segment's regional independent agent network as well as a national accounts sales force focused on large sized accounts countrywide. In addition, the affinity group property & casualty insurance business, which was included in Citizens Midwest, Hanover North and Hanover South in the first quarter of 1999, is also included in the Allmerica Voluntary Benefits distribution channel. Allmerica Specialty offers special niche property & casualty products in selected markets. Page 10 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
(In millions) Quarter ended December 31, 1999 Hanover Hanover Citizens Voluntary Allmerica Other North South Midwest Benefits Specialty Total Net premiums earned $169.5 $ 52.7 $128.5 $134.3 $ 10.7 $ 0.7 $496.4 Policy benefits claims, losses and loss adjustment expenses 109.8 38.0 86.2 99.5 12.5 0.4 346.4 Policy acquisition and other underwriting expenses 49.2 15.8 34.4 29.2 4.5 3.3 136.4 Policyholders' dividends 0.3 0.8 3.0 0.0 0.1 0.0 4.2 ---------------------------------------------------------- Underwriting profit (loss) 10.2 (1.9) 4.9 5.6 (6.4) (3.0) 9.4 ---------------------------------------------------------- Net investment income 20.4 5.5 16.5 10.5 1.9 (1.2) 53.6 Other income and expenses, net 1.2 0.2 0.4 (0.4) 0.6 0.0 2.0 ---------------------------------------------------------- Net operating income (loss) before taxes $ 31.8 $ 3.8 $ 21.8 $ 15.7 $ (3.9) $ (4.2) $ 65.0 ========================================================== PRETAX CATASTROPHE LOSSES $ 0.0 $ (0.6) $ 3.1 $ 1.4 $ 0.1 $ (0.2) $ 3.8 ========================================================== Includes results from certain property and casualty business which the Company has exited, as well as purchase accounting adjustments.
Quarter ended December 31, 1998 Hanover Hanover Citizens Voluntary Allmerica Other (In millions) North South Midwest Benefits Specialty Total Net premiums earned $152.4 $ 51.2 $136.3 $133.9 $ 13.4 $ 3.1 $490.3 Policy benefits, claims, losses and loss adjustment expenses 105.0 35.2 101.3 95.3 9.6 8.6 355.0 Policy acquisition and other underwriting expenses 45.0 17.1 37.0 28.4 8.4 2.1 138.0 Policyholders' dividends 2.4 0.1 1.3 0.0 0.0 0.0 3.8 --------------------------------------------------------- Underwriting (loss) profit 0.0 (1.2) (3.3) 10.2 (4.6) (7.6) (6.5) --------------------------------------------------------- Net investment income 20.9 5.8 17.2 12.2 2.2 0.0 58.3 Other income and expenses, net 0.7 0.2 0.5 (1.2) 0.2 0.2 0.6 --------------------------------------------------------- Net operating income (loss) before taxes and minority interest $ 21.6 $ 4.8 $ 14.4 $ 21.2 $ (2.2) $ (7.4) $ 52.4 ========================================================= PRETAX CATASTROPHE LOSSES $ 0.1 $ (0.9) $ 3.2 $ 5.5 $ 0.0 $ 0.0 $ 7.9 ========================================================= Includes results from certain property and casualty business which the Company has exited, as well as purchase accounting adjustments.
Page 11 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
(In millions) Year ended December 31, 1999 Hanover Hanover Citizens Voluntary Allmerica Other North South Midwest Benefits Specialty Total Net premiums earned $644.9 $202.0 $520.3 $525.6 $ 50.1 $ 5.3 $1,948.2 Policy benefits, claims, losses and loss adjustment expenses 438.0 146.1 373.0 402.9 44.6 3.4 1,408.0 Policy acquisition and other underwriting expenses 197.0 63.5 139.9 124.5 18.8 12.2 555.9 Policyholders' dividends 5.5 1.1 5.6 0.0 0.1 0.0 12.3 ----------------------------------------------------------- Underwriting profit (loss) 4.4 (8.7) 1.8 (1.8) (13.4) (10.3) (28.0) ----------------------------------------------------------- Net investment income 83.5 23.0 65.5 45.4 8.6 (4.6) 221.4 Other income and expenses, net 4.6 (0.1) 1.8 (2.4) 2.3 0.0 6.2 ----------------------------------------------------------- Net operating income (loss) before taxes and minority interest $ 92.5 $ 14.2 $ 69.1 $ 41.2 $(2.5) $(14.9) $ 199.6 =========================================================== PRETAX CATASTROPHE LOSSES $ 13.3 $ 11.3 $ 19.7 $ 32.5 $ 0.1 $ 0.0 $ 76.9 =========================================================== Includes results from certain property and casualty business which the Company has exited, as well as purchase accounting adjustments.
Year ended December 31, 1998 Hanover Hanover Citizens Voluntary Allmerica Other (In millions) North South Midwest Benefits Specialty Total Net premiums earned $606.1 $217.4 $546.2 $525.8 $ 39.4 $ 33.0 $1,967.9 Policy benefits, claims, losses and loss adjustment expenses 454.4 152.0 425.9 392.5 24.9 33.8 1,483.5 Policy acquisition and other underwriting expenses 182.9 72.5 153.7 118.0 21.0 8.3 556.4 Policyholders' dividends 5.4 0.3 5.7 0.0 0.0 0.5 11.9 ----------------------------------------------------------- Underwriting (loss) profit (36.6) (7.4) (39.1) 15.3 (6.5) (9.6) (83.9) ----------------------------------------------------------- Net investment income 81.8 22.8 68.1 48.3 8.6 0.2 229.8 Other income and expenses, net 4.5 0.8 1.8 (2.9) (0.5) 0.0 3.7 ----------------------------------------------------------- Net operating income (loss) before taxes and minority interest $ 49.7 $ 16.2 $ 30.8 $ 60.7 $ 1.6 $ (9.4) $ 149.6 =========================================================== PRETAX CATASTROPHE LOSSES $ 19.0 $ 11.3 $ 28.7 $ 31.3 $ 0.0 $ 0.0 $ 90.3 =========================================================== Includes results from certain property and casualty business which the Company has exited, as well as purchase accounting adjustments.
Page 12 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
(In millions, Quarter ended December 31, 1999 except ratios) Hanover Hanover Citizens Voluntary Allmerica North South Midwest Benefits Specialty Other Total NET PREMIUMS WRITTEN Personal automobile $ 66.8 $ 10.3 $ 32.9 $ 95.0 $ 0.0 $ (1.2) $ 203.8 Homeowners 24.1 7.9 5.7 28.5 0.0 0.1 66.3 Workers' compensation 17.4 5.7 16.4 0.0 0.7 0.6 40.8 Commercial automobile 20.8 6.6 22.5 0.0 2.6 0.1 52.6 Commercial multiple peril 32.7 13.8 27.9 0.0 2.4 0.0 76.8 Other property & casualty 9.8 4.2 11.1 2.6 3.1 0.6 31.4 ----------------------------------------------------------- Total $171.6 $ 48.5 $116.5 $126.1 $ 8.8 $ 0.2 $ 471.7 =========================================================== NET PREMIUMS EARNED Personal automobile $ 68.9 $ 10.9 $ 37.8 $104.0 $ 0.0 $(0.1) $ 221.5 Homeowners 23.8 8.6 6.1 27.7 0.0 0.1 66.3 Workers' compensation 16.8 6.1 21.9 0.0 1.4 0.1 46.3 Commercial automobile 19.3 7.0 24.0 0.0 2.0 0.2 52.5 Commercial multiple peril 30.2 15.6 27.0 0.0 3.4 0.0 76.2 Other property & casualty 10.5 4.5 11.7 2.6 3.9 0.4 33.6 ----------------------------------------------------------- Total $169.5 $ 52.7 $128.5 $134.3 $ 10.7 $ 0.7 $ 496.4 =========================================================== POLICY BENEFITS, CLAIMS AND LOSSES Personal automobile $ 38.1 $ 5.7 $ 23.8 $ 73.9 $ 0.0 $(0.1) $ 141.4 Homeowners 10.5 3.4 1.2 14.3 0.0 0.0 29.4 Workers' compensation 13.4 5.5 15.9 0.0 1.6 (0.5) 35.9 Commercial automobile 12.2 5.1 17.3 0.0 2.0 0.3 36.9 Commercial multiple peril 16.9 10.6 10.8 0.0 3.6 (1.1) 40.8 Other property & casualty 4.7 2.0 7.3 0.8 3.1 1.6 19.5 ----------------------------------------------------------- Total $ 95.8 $ 32.3 $ 76.3 $ 89.0 $ 10.3 $ 0.2 $ 303.9 =========================================================== LOSS ADJUSTMENT EXPENSES $ 14.0 $ 5.7 $ 9.9 $ 10.5 $ 2.2 $ 0.2 $ 42.5 =========================================================== STATUTORY RATIOS LOSSES Personal automobile 55.3% 52.3% 63.0% 71.1% 0.0% N/M 63.8% Homeowners 44.3% 39.4% 19.8% 51.9% 0.0% N/M 44.5% Workers' compensation 76.6% 85.9% 64.4% 0.0% 66.7% N/M 70.4% Commercial automobile 63.2% 72.9% 72.1% 0.0% 100.0% N/M 70.3% Commercial multiple peril 55.8% 68.0% 40.0% 0.0% 105.9% N/M 53.5% Other property & casualty 44.8% 44.4% 62.4% 30.8% 79.5% N/M 58.0% ----------------------------------------------------------- Total 56.3% 60.9% 58.1% 66.3% 91.2% N/M 60.6% =========================================================== LOSS ADJUSTMENT EXPENSES 8.2% 10.8% 7.2% 7.4% 21.6% N/M 8.4% ===========================================================
Page 13 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
(In millions, Quarter ended December 31, 1998 except ratios) Hanover Hanover Citizens Voluntary Allmerica North South Midwest Benefits Specialty Other Total NET PREMIUMS WRITTEN Personal automobile $ 58.9 $ 12.5 $ 38.0 $ 94.1 $ 0.0 $ 0.1 $ 203.6 Homeowners 23.2 7.9 8.0 23.6 0.0 (1.8) 60.9 Workers' compensation 15.2 5.5 21.7 0.0 0.8 0.0 43.2 Commercial automobile 16.6 6.5 21.0 0.0 2.6 0.6 47.3 Commercial multiple peril 28.7 13.3 22.2 0.0 4.0 (0.3) 67.9 Other property & casualty 7.2 4.8 10.4 2.6 5.6 2.1 32.7 ---------------------------------------------------------- Total $149.8 $ 50.5 $121.3 $120.3 $ 13.0 $ 0.7 $ 455.6 ========================================================== NET PREMIUMS EARNED Personal automobile $ 63.4 $ 13.4 $ 43.9 $106.5 $ 0.0 $ 0.0 $ 227.2 Homeowners 22.3 8.5 8.9 25.0 0.0 0.6 65.3 Workers' compensation 15.7 5.6 26.6 0.0 1.0 0.4 49.3 Commercial automobile 17.0 6.3 22.5 0.0 2.2 1.1 49.1 Commercial multiple peril 27.0 13.2 24.8 0.0 3.7 1.1 69.8 Other property & casualty 7.0 4.2 9.6 2.4 6.5 (0.1) 29.6 ---------------------------------------------------------- Total $152.4 $ 51.2 $136.3 $133.9 $ 13.4 $ 3.1 $ 490.3 ========================================================== POLICY BENEFITS, CLAIMS AND LOSSES Personal automobile $ 41.5 $ 8.1 $ 26.0 $ 69.6 $ 0.0 $ 1.6 $ 146.8 Homeowners 9.3 3.0 8.5 16.7 0.0 0.0 37.5 Workers' compensation 17.1 3.4 10.4 0.0 0.4 0.0 31.3 Commercial automobile 11.6 5.4 19.3 (0.1) 2.6 1.8 40.6 Commercial multiple peril 11.6 10.2 23.1 0.0 3.3 2.9 51.1 Other property & casualty (0.7) 0.9 6.3 1.0 2.4 0.1 10.0 ---------------------------------------------------------- Total $ 90.4 $ 31.0 $ 93.6 $ 87.2 $ 8.7 $ 6.4 $ 317.3 ========================================================== LOSS ADJUSTMENT EXPENSES $ 14.6 $ 4.2 $ 7.7 $ 8.1 $ 0.9 $ 2.2 $ 37.7 ========================================================== STATUTORY RATIOS LOSSES Personal automobile 65.5% 60.4% 59.2% 65.3% 0.0% N/M 64.6% Homeowners 41.7% 35.3% 95.5% 66.8% 0.0% N/M 57.5% Workers' compensation 108.2% 60.7% 39.4% 0.0% 14.3% N/M 63.8% Commercial automobile 68.4% 85.7% 86.2% N/M 118.2% N/M 82.9% Commercial multiple peril 43.1% 77.3% 92.8% 0.0% 89.2% N/M 73.2% Other property & casualty N/M 21.4% 65.8% 41.2% 30.0% N/M 32.2% ----------------------------------------------------------- Total 59.3% 60.5% 68.7% 65.1% 59.6% N/M 64.6% =========================================================== LOSS ADJUSTMENT EXPENSES 10.0% 11.5% 7.1% 6.4% 7.2% N/M 8.2% ===========================================================
Page 14 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
(In millions, Year ended December 31, 1999 except ratios) Hanover Hanover Citizens Voluntary Allmerica North South Midwest Benefits Specialty Other Total NET PREMIUMS WRITTEN Personal automobile $ 270.5 $ 43.1 $ 154.0 $ 436.0 $ 0.0 $ 1.6 $ 905.2 Homeowners 93.1 30.7 25.8 99.0 0.0 0.2 248.8 Workers' compensation 67.1 25.0 98.5 0.0 3.7 0.7 195.0 Commercial automobile 80.2 28.3 87.4 0.0 8.0 (0.6) 203.3 Commercial multiple peril 116.8 54.9 108.2 0.0 9.5 (0.1) 289.3 Other property & casualty 40.4 16.4 47.4 10.6 19.0 1.6 135.4 ------------------------------------------------------------ Total $ 668.1 $ 198.4 $ 521.3 $ 545.6 $ 40.2 $ 3.4 $1,977.0 ============================================================ NET PREMIUMS EARNED Personal automobile $ 261.0 $ 45.5 $ 160.5 $ 424.5 $ 0.0 $ 3.0 $ 894.5 Homeowners 91.7 32.0 27.8 91.0 0.0 0.5 243.0 Workers' compensation 64.0 23.9 97.6 0.0 5.3 (0.1) 190.7 Commercial automobile 74.4 27.7 86.1 0.0 9.7 (0.2) 197.7 Commercial multiple peril 113.7 55.2 102.5 0.0 14.5 0.4 286.3 Other property & casualty 40.1 17.7 45.8 10.1 20.6 1.7 136.0 ------------------------------------------------------------ Total $ 644.9 $ 202.0 $ 520.3 $ 525.6 $ 50.1 $ 5.3 $1,948.2 ============================================================ POLICY BENEFITS, CLAIMS AND LOSSES Personal automobile $ 159.4 $ 25.7 $ 107.9 $ 284.7 $ 0.0 $ 0.5 $ 578.2 Homeowners 46.9 17.8 18.4 72.9 0.0 0.1 156.1 Workers' compensation 42.2 17.2 58.0 0.0 2.0 2.4 121.8 Commercial automobile 50.0 19.6 63.8 0.0 9.1 (1.8) 140.7 Commercial multiple peril 70.9 37.1 65.4 0.0 12.1 (3.1) 182.4 Other property & casualty 13.1 7.6 22.0 4.0 13.4 4.0 64.1 ------------------------------------------------------------ Total $ 382.5 $ 125.0 $ 335.5 $ 361.6 $ 36.6 $ 2.1 $1,243.3 ============================================================ LOSS ADJUSTMENT EXPENSES $ 55.5 $ 21.1 $ 37.5 $ 41.3 $ 8.0 $ 1.3 $ 164.7 ============================================================ STATUTORY RATIOS LOSSES Personal automobile 61.1% 56.5% 67.2% 67.1% 0.0% N/M 64.6% Homeowners 51.1% 55.6% 66.1% 80.1% 0.0% N/M 64.2% Workers' compensation 65.4% 71.4% 57.3% 0.0% N/M N/M 61.9% Commercial automobile 67.2% 70.8% 74.1% 0.0% 93.8% N/M 71.2% Commercial multiple peril 62.4% 67.2% 63.8% 0.0% 83.4% N/M 63.7% Other property & casualty 32.7% 42.9% 48.0% 39.6% 65.5% N/M 47.2% ------------------------------------------------------------ Total 59.3% 61.8% 64.0% 68.8% 71.4% N/M 63.6% ============================================================ LOSS ADJUSTMENT EXPENSES 8.6% 10.4% 7.2% 7.9% 16.4% N/M 8.4% ===========================================================
Page 15 ALLMERICA FINANCIAL CORPORATION RISK MANAGEMENT SELECTED FINANCIAL INFORMATION BY DISTRIBUTION CHANNEL
(In millions, Year ended December 31, 1998 except ratios) Hanover Hanover Citizens Voluntary Allmerica North South Midwest Benefits Specialty Other Total NET PREMIUMS WRITTEN Personal automobile $ 256.5 $ 54.2 $ 176.5 $ 419.4 $ 0.0 $ 1.5 $ 908.1 Homeowners 90.6 33.0 35.4 99.0 0.0 (0.9) 257.1 Workers' compensation 55.5 21.4 100.6 0.0 2.7 0.0 180.2 Commercial automobile 67.7 25.9 88.5 0.0 6.5 2.4 191.0 Commercial multiple peril 108.8 53.1 101.4 0.0 15.6 1.9 280.8 Other property & casualty 37.0 20.5 45.1 9.1 23.3 4.5 139.5 ------------------------------------------------------------ Total $ 616.1 $ 208.1 $ 547.5 $ 527.5 $ 48.1 $ 9.4 $1,956.7 ============================================================ NET PREMIUMS EARNED Personal automobile $ 248.9 $ 60.1 $ 180.3 $ 422.5 $ 0.0 $ 2.2 $ 914.0 Homeowners 87.5 36.8 37.0 94.6 0.0 4.4 260.3 Workers' compensation 59.9 20.8 101.4 0.0 4.4 0.6 187.1 Commercial automobile 66.0 25.6 87.1 0.0 5.6 5.5 189.8 Commercial multiple peril 107.4 53.6 98.1 0.0 10.4 9.4 278.9 Other property & casualty 36.4 20.5 42.3 8.7 19.0 10.9 137.8 ------------------------------------------------------------ Total $ 606.1 $ 217.4 $ 546.2 $ 525.8 $ 39.4 $33.0 $1,967.9 ============================================================ POLICY BENEFITS, CLAIMS AND LOSSES Personal automobile $ 173.6 $ 36.2 $ 117.8 $ 280.5 $ 0.0 $ 3.7 $ 611.8 Homeowners 52.7 23.1 39.4 81.1 (0.1) 1.6 197.8 Workers' compensation 44.4 11.1 60.2 0.0 1.0 0.0 116.7 Commercial automobile 47.7 18.8 67.0 (0.1) 4.6 3.9 141.9 Commercial multiple peril 58.8 37.7 77.1 0.0 5.6 11.7 190.9 Other property & casualty 15.7 6.9 24.1 3.7 11.0 7.0 68.4 ------------------------------------------------------------ Total $ 392.9 $ 133.8 $ 385.6 $ 365.2 $ 22.1 $27.9 $1,327.5 ============================================================ LOSS ADJUSTMENT EXPENSES $ 61.5 $ 18.2 $ 40.3 $ 27.3 $ 2.8 $ 5.9 $ 156.0 ============================================================ STATUTORY RATIOS LOSSES Personal automobile 69.8% 60.2% 65.4% 66.4% 0.0% N/M 66.9% Homeowners 60.1% 62.8% 106.5% 85.6% N/M N/M 76.0% Workers' compensation 74.1% 53.4% 59.9% 0.0% 7.7% N/M 62.5% Commercial automobile 72.2% 73.4% 77.0% N/M 82.1% N/M 74.8% Commercial multiple peril 54.8% 70.3% 78.8% 0.0% 53.8% N/M 68.5% Other property & casualty 43.3% 33.7% 56.7% 43.1% 53.5% N/M 49.0% ------------------------------------------------------------ Total 64.8% 61.6% 70.7% 69.5% 52.8% N/M 67.4% ============================================================ LOSS ADJUSTMENT EXPENSES 9.6% 8.9% 7.6% 7.2% 7.7% N/M 8.1% ===========================================================
Page 16 ALLMERICA FINANCIAL CORPORATION PROPERTY AND CASUALTY SELECTED FINANCIAL INFORMATION AND SUPPLEMENTAL DATA
December 31 December 31 (In millions) 1999 1998 INVESTMENTS Tax exempt debt securities $ 2,084.7 $ 2,474.1 Taxable debt securities 1,165.0 1,056.7 Equity securities 31.9 333.9 Other investments 1.4 2.2 ----------------------- Total investments $ 3,283.0 $ 3,866.9 =======================
Quarter ended Year ended December 31 December 31 (In millions, except ratios) 1999 1998 1999 1998 INVESTMENT RESULTS Net investment income before taxes $ 53.6 $ 58.3 $ 221.4 $ 229.8 Net investment income after taxes 45.3 50.0 185.1 193.5 Effective tax rate on investment income 15.5% 14.2% 16.4% 15.8% ----------------------------------------- NET REALIZED GAINS Net realized (losses) gains before taxes $ (6.0) $ (1.8) $ 102.5 $ 41.4 Net realized (losses) gains after taxes (8.5) (4.5) 66.6 26.9 Effective tax rate on net realized gains N/M N/M 35.0% 35.0% ----------------------------------------- EARNED PREMIUM BY STATE Michigan $ 192.2 $ 196.1 $ 750.1 $ 787.3 Massachusetts 78.6 72.8 305.7 277.8 New York 47.0 45.5 179.7 180.6 New Jersey 31.1 31.1 126.2 118.0 Maine 19.9 17.4 73.4 67.2 Indiana 18.0 19.6 73.2 71.2 Connecticut 12.1 12.4 49.2 47.2 Illinois 13.1 11.5 48.2 45.8 Other 83.9 83.4 340.6 371.2 ----------------------------------------- $ 495.9 $ 489.8 $1,946.3 $1,966.3 =========================================
Page 17 ALLMERICA FINANCIAL CORPORATION PROPERTY AND CASUALTY SELECTED FINANCIAL INFORMATION AND SUPPLEMENTAL DATA
Quarter ended Quarter ended December 31, 1999 December 31, 1998 (In millions, except ratios) Hanover Citizens Hanover Citizens Net premiums written $ 276.5 $ 200.2 $ 253.0 $ 203.8 Change in unearned premiums, net of prepaid reinsurance premiums (5.2) (20.7) (14.7) (19.9) ------------------------------------------ Net premiums earned 281.7 220.9 267.7 223.7 ------------------------------------------ Losses and loss adjustment expenses Paid 230.7 164.0 213.5 166.0 Change in reserves (36.8) (9.7) (21.6) 0.2 ------------------------------------------ Losses and LAE incurred 193.9 154.3 191.9 166.2 ------------------------------------------ Policy acquisition and other underwriting expenses 87.1 48.9 81.6 50.3 Policyholders' dividends 1.5 2.7 2.6 1.3 ------------------------------------------ Statutory underwriting (loss) Profit $ (0.8) $ 15.0 $ (8.4) $ 5.9 ========================================== STATUTORY NET INCOME $ 25.5 $ 28.4 $ 13.3 $ 23.0 ========================================== STATUTORY RATIOS Losses 59.5% 62.6% 61.6% 68.5% Loss adjustment expenses 9.3% 7.2% 10.2% 5.8% Policy acquisition and other underwriting expenses 31.5% 24.4% 32.3% 24.7% Policyholders' dividends 0.5% 1.2% 1.0% 0.6% ------------------------------------------ Combined 100.8% 95.4% 105.1% 99.6% ========================================== Includes corporate overhead.
Year ended Year ended December 31, 1999 December 31, 1998 (In millions, except ratios) Hanover Citizens Hanover Citizens Net premiums written $ 1,128.9 $ 860.9 $ 1,071.0 $ 888.2 Change in unearned premiums, net of prepaid reinsurance premiums 24.3 4.9 (15.3) 4.2 ------------------------------------------ Net premiums earned 1,104.6 856.0 1,086.3 884.0 ------------------------------------------ Losses and loss adjustment expenses Paid 812.7 686.4 842.1 676.8 Change in reserves (37.9) (47.2) (39.9) 8.4 ------------------------------------------ Losses and LAE incurred 774.8 639.2 802.2 685.2 ------------------------------------------ Policy acquisition and other underwriting expenses 349.4 217.9 341.6 216.8 Policyholders' dividends 6.4 4.1 6.5 5.6 ------------------------------------------ Statutory underwriting loss $ (26.0) $ (5.2) $ (64.0) $ (23.6) ========================================== STATUTORY NET INCOME $ 377.0 $ 131.9 $ 92.7 $ 88.0 ========================================== STATUTORY SURPLUS $ 1,085.7 $ 458.0 $ 1,261.0 $ 620.7 ========================================== STATUTORY RATIOS Losses 61.0% 67.2% 64.7% 70.7% Loss adjustment expenses 9.1% 7.5% 9.2% 6.8% Policy acquisition and other underwriting expenses 31.0% 25.3% 31.9% 24.4% Policyholders' dividends 0.6% 0.5% 0.6% 0.6% ------------------------------------------ Combined 101.7% 100.5% 106.4% 102.5% ========================================== Includes corporate overhead.
Page 18 ALLMERICA FINANCIAL CORPORATION ALLMERICA FINANCIAL SERVICES CONDENSED INCOME STATEMENTS
Quarter ended Year ended December 31 December 31 % % (In millions) 1999 1998 Change 1999 1998 Change REVENUES Premiums $ 1.2 $ 1.3 (7.7) $ 2.3 $ 2.7 (14.8) Universal life and investment product policy fees 96.4 79.4 21.4 359.3 296.6 21.1 Net investment income 60.3 64.0 (5.8) 251.1 253.1 (0.8) Other income 27.8 18.8 47.9 87.7 62.9 39.4 Operating contribution from the Closed Block 3.8 3.8 0.0 14.4 10.3 39.8 ---------------------------------------------- Total operating revenue 189.5 167.3 13.3 714.8 625.6 14.3 ---------------------------------------------- POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES Policy benefits, claims and losses 58.3 54.7 6.6 232.1 219.3 5.8 Policy acquisition expenses 19.8 16.9 17.2 65.5 59.8 9.5 Other operating expenses 57.2 52.2 9.6 211.7 177.5 19.3 ---------------------------------------------- Total policy benefits, claims and operating expenses 135.3 123.8 9.3 509.3 456.6 11.5 ---------------------------------------------- Net operating income before taxes 54.2 43.5 24.6 205.5 169.0 21.6 Net realized investment gains (losses), net of amortization 1.0 (0.1) N/M 17.2 (0.5) N/M Sales practice litigation expense 0.0 0.0 0.0 0.0 (31.0) N/M Other non-operating items 0.0 0.0 0.0 0.0 (0.8) N/M ---------------------------------------------- Net income before taxes $ 55.2 $ 43.4 27.2 $222.7 $136.7 62.9 ==============================================
Page 19 ALLMERICA FINANCIAL CORPORATION ALLMERICA FINANCIAL SERVICES OPERATING INCOME BY PRODUCT LINE
(In millions) Quarter ended December 31, 1999 Variable Group Individual Universal Universal Closed Retirement All Annuities Life Life Block Products Others Total REVENUES Premiums $ 0.0 $ 0.0 $ 0.0 $ 8.6 $ 0.9 $ 0.3 $ 9.8 Universal life and investment product policy fees 52.9 19.9 16.7 0.0 6.9 0.0 96.4 Net investment income 17.3 0.3 19.6 13.2 19.4 3.7 73.5 Other income 11.3 1.4 0.2 0.0 1.7 13.2 27.8 --------------------------------------------------------------------- Total operating revenue 81.5 21.6 36.5 21.8 28.9 17.2 207.5 --------------------------------------------------------------------- POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES Policy benefits, claims and losses 19.6 2.7 16.9 17.3 17.1 2.0 75.6 Policy acquisition expenses 11.9 1.9 5.2 0.8 0.8 0.0 20.6 ---------------------------------------------------------------------- Total policy benefits, claims, and policy acquisition expenses 31.5 4.6 22.1 18.1 17.9 2.0 96.2 --------------------------------------------------------------------- Operating income before other operating expenses $ 50.0 $ 17.0 $ 14.4 $ 3.7 $ 11.0 $ 15.2 111.3 =========================================================== Other operating expenses 57.1 --------- Net operating income before taxes $ 54.2 ========= Includes defined benefit and defined contribution plan products and services. Includes non-insurance activities and products in runoff (e.g.YRT,DI). Includes other operating expenses from the Closed Block of approximately $(0.1) million for the quarter ended December 31, 1999.
(In millions) Quarter ended December 31, 1998 Variable Group Individual Universal Universal Closed Retirement All Annuities Life Life Block Products Others Total REVENUES Premiums $ 0.0 $ (0.2) $ 0.1 $ 9.1 $ 0.9 $ 0.5 $ 10.4 Universal life and investment product policy fees 38.9 17.2 17.4 0.0 5.9 0.0 79.4 Net investment income 16.7 (0.4) 19.2 13.4 20.2 8.3 77.4 Other income 6.2 1.3 0.2 0.0 3.2 7.9 18.8 -------------------------------------------------------------------- Total operating revenue 61.8 17.9 36.9 22.5 30.2 16.7 186.0 -------------------------------------------------------------------- POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES Policy benefits, claims and losses 13.9 3.9 19.8 18.1 12.9 4.2 72.8 Policy acquisition expenses 10.3 0.9 4.9 0.5 0.8 0.0 17.4 --------------------------------------------------------------------- Total policy benefits, claims, and policy acquisition expenses 24.2 4.8 24.7 18.6 13.7 4.2 90.2 -------------------------------------------------------------------- Operating income before other operating expenses $ 37.6 $ 13.1 $ 12.2 $ 3.9 $ 16.5 $ 12.5 95.8 ============================================================= Other operating expenses 52.3 ------- Net operating income before taxes $ 43.5 ======== Includes defined benefit and defined contribution plan products and services. Includes non-insurance activities and products in runoff (e.g.YRT,DI). Includes other operating expenses from the Closed Block of approximately $0.1 million for the quarter ended December 31, 1998.
Page 20 ALLMERICA FINANCIAL CORPORATION ALLMERICA FINANCIAL SERVICES OPERATING INCOME BY PRODUCT LINE
(In millions) Year ended December 31, 1999 Variable Group Individual Universal Universal Closed Retirement All Annuities Life Life Block Products Others Total REVENUES Premiums $ 0.0 $ 0.0 $ 0.2 $ 52.2 $ 0.9 $ 1.2 $ 54.5 Universal life and investment product policy fees 192.7 75.1 68.1 0.0 23.4 0.0 359.3 Net investment income 70.4 0.8 78.4 53.7 79.4 22.1 304.8 Other income 33.9 4.5 0.9 0.0 8.8 39.6 87.7 -------------------------------------------------------------------- Total operating revenue 297.0 80.4 147.6 105.9 112.5 62.9 806.3 -------------------------------------------------------------------- POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES Policy benefits, claims and losses 76.6 23.2 68.9 88.9 57.9 5.5 321.0 Policy acquisition expenses 36.5 6.8 19.6 2.5 2.6 0.0 68.0 --------------------------------------------------------------------- Total policy benefits, claims, and policy acquisition expenses 113.1 30.0 88.5 91.4 60.5 5.5 389.0 -------------------------------------------------------------------- Operating income before other operating expenses $183.9 $ 50.4 $ 59.1 $ 14.5 $ 52.0 $ 57.4 417.3 ============================================================ Other operating expenses 211.8 -------- Net operating income before taxes $ 205.5 ======== Includes defined benefit and defined contribution plan products and services. Includes non-insurance activities and products in runoff (e.g.YRT,DI). Includes other operating expenses from the Closed Block of approximately $0.1 million for the year ended December 31, 1999.
(In millions) Year ended December 31, 1998 Variable Group Individual Universal Universal Closed Retirement All Annuities Life Life Block Products Others Total REVENUES Premiums $ 0.0 $ 0.0 $ 0.0 $ 55.4 $ 1.0 $ 1.7 $ 58.1 Universal life and investment product policy fees 137.0 64.7 71.2 0.0 23.7 0.0 296.6 Net investment income 71.6 (0.8) 79.7 53.3 85.5 17.1 306.4 Other income 25.0 3.6 0.8 0.0 9.0 24.5 62.9 -------------------------------------------------------------------- Total operating revenue 233.6 67.5 151.7 108.7 119.2 43.3 724.0 -------------------------------------------------------------------- POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES Policy benefits, claims and losses 53.3 22.0 79.0 95.0 57.1 7.9 314.3 Policy acquisition expenses 31.6 4.2 21.7 2.7 2.3 0.0 62.5 --------------------------------------------------------------------- Total policy benefits, claims, and policy acquisition expenses 84.9 26.2 100.7 97.7 59.4 7.9 376.8 -------------------------------------------------------------------- Operating income before other operating expenses $148.7 $ 41.3 $ 51.0 $ 11.0 $ 59.8 $ 35.4 347.2 ============================================================ Other operating expenses 178.2 ------- Net operating income before taxes $ 169.0 ======== Includes defined benefit and defined contribution plan products and services. Includes non-insurance activities and products in runoff (e.g.YRT,DI). Includes other operating expenses from the Closed Block of approximately $0.7 million for the year ended December 31, 1998.
Page 21 ALLMERICA FINANCIAL CORPORATION ALLMERICA FINANCIAL SERVICES PREMIUMS, DEPOSITS AND OTHER INCOME
Quarter ended Year ended December 31 December 31 % % (In millions) 1999 1998 Change 1999 1998 Change STATUTORY PREMIUMS AND DEPOSITS SUMMARY Insurance Traditional life $ 14.9 $ 10.4 43.3 $ 77.4 $ 55.9 38.5 Universal life 17.7 3.8 N/M 71.8 23.6 N/M Variable universal life 52.2 42.9 21.7 187.0 158.7 17.8 Individual health 0.1 0.1 0.0 0.3 0.6 (50.0) Group variable universal life 64.3 50.1 28.3 94.9 73.3 29.5 -------------------------------------------------- Total insurance 149.2 107.3 39.0 431.4 312.1 38.2 ------------------------------------------------- Annuities Separate account annuities 483.2 463.6 4.2 1,922.2 2,583.6 (25.6) General account annuities 166.9 239.7 (30.4) 830.2 622.2 33.4 Retirement investment accounts 2.9 3.7 (21.6) 16.4 20.1 (18.4) -------------------------------------------------- Total individual annuities 653.0 707.0 (7.6) 2,768.8 3,225.9 (14.2) Group annuities 107.1 161.9 (33.8) 409.3 563.9 (27.4) -------------------------------------------------- Total annuities 760.1 868.9 (12.5) 3,178.1 3,789.8 (16.1) -------------------------------------------------- Total premiums and deposits $909.3 $976.2 (6.9) $3,609.5 $4,101.9 (12.0) ================================================== COMPONENTS Insurance Traditional life New business premium $ 0.8 $ 0.8 0.0 $ 11.9 $ 12.6 (5.6) Renewal premium and deposits 14.1 9.6 46.9 65.5 43.3 51.3 -------------------------------------------------- $ 14.9 $ 10.4 43.3 $ 77.4 $ 55.9 38.5 ================================================== Universal life New business premium $ 0.1 $ 0.0 N/M $ 0.5 $ 0.2 N/M Renewal premium and deposits 17.6 3.8 N/M 71.3 23.4 N/M -------------------------------------------------- $ 17.7 $ 3.8 N/M $ 71.8 $ 23.6 N/M ================================================== Variable universal life New business premium $ 28.0 $ 21.4 30.8 $ 97.7 $ 74.8 30.6 Renewal premium and deposits 24.2 21.5 12.6 89.3 83.9 6.4 -------------------------------------------------- $ 52.2 $ 42.9 21.7 $ 187.0 $ 158.7 17.8 ================================================== Individual annuities by distribution channel Agency $206.1 $189.3 8.9 $ 930.1 $ 871.3 6.7 Select 175.3 124.3 41.0 633.1 609.8 3.8 Kemper 171.3 199.3 (14.0) 637.3 884.1 (27.9) Pioneer 59.0 90.8 (35.0) 317.5 359.0 (11.6) Delaware 37.3 94.0 (60.3) 219.6 469.3 (53.2) Fulcrum 1.1 5.6 (80.4) 14.8 12.3 20.3 Retirement investment accounts 2.9 3.7 (21.6) 16.4 20.1 (18.4) ------------------------------------------------- $653.0 $707.0 (7.6) $2,768.8 $3,225.9 (14.2) ================================================= GAAP OTHER INCOME (Excluding Closed Block) Investment management fees $ 10.3 $ 7.8 32.1 $ 39.3 $ 31.0 26.8 Brokerage income 7.8 5.4 44.4 24.3 19.3 25.9 Other 9.7 5.6 73.2 24.1 12.6 91.3 ------------------------------------------------- $ 27.8 $ 18.8 47.9 $ 87.7 $ 62.9 39.4 =================================================
Page 22 ALLMERICA FINANCIAL CORPORATION ALLMERICA FINANCIAL SERVICES FUTURE POLICY BENEFITS AND ACCOUNT BALANCES
December 31 December 31 (In millions) 1999 1998 % Change GENERAL ACCOUNT RESERVES Insurance Traditional life, excluding Closed Block $ 37.7 $ 36.3 3.9 Universal life 816.1 845.3 (3.5) Variable universal life 136.3 109.8 24.1 Individual health 273.0 267.8 1.9 Group variable universal life 10.0 3.1 N/M ---------------------------------- Total insurance 1,273.1 1,262.3 0.1 ---------------------------------- Annuities Individual annuities 1,218.9 1,226.9 (0.7) Group annuities 870.9 1,000.8 (13.0) ---------------------------------- Total annuities 2,089.8 2,227.7 (6.2) ---------------------------------- Total general account reserves $ 3,362.9 $ 3,490.0 (3.6) ================================== SEPARATE ACCOUNT LIABILITIES Variable individual life $ 1,244.8 $ 921.8 35.0 Variable individual annuities 13,872.6 10,570.9 31.2 ---------------------------------- Total individual 15,117.4 11,492.7 31.5 Group variable universal life 260.5 161.2 61.6 Group annuities 2,251.0 2,037.6 10.5 ---------------------------------- Total group 2,511.5 2,198.8 14.2 ---------------------------------- Total separate account liabilities $17,628.9 $13,691.5 28.8 ==================================
Year ended December 31 (In millions) 1999 1998 % Change UNIVERSAL LIFE Policyholder deposits, beginning of period $ 772.3 $ 810.9 (4.8) Withdrawals during the period (56.3) (64.6) (12.8) Net premiums and deposits during the period 23.0 23.6 (2.5) Interest credited during the period 36.6 41.4 (11.6) Insurance and administrative charges (65.5) (68.1) (3.8) Reinsurance adjustment 25.1 29.1 (13.7) --------------------------------- Outstanding deposits, end of period 735.2 772.3 (4.8) Other universal life benefit liabilities 80.9 73.0 10.8 --------------------------------- Total universal life policy benefit balances $ 816.1 $ 845.3 (3.5) =================================
Page 23 ALLMERICA FINANCIAL CORPORATION ALLMERICA ASSET MANAGEMENT CONDENSED INCOME STATEMENTS AND SUPPLEMENTAL INFORMATION
Quarter ended Year ended December 31 December 31 % % (In millions) 1999 1998 Change 1999 1998 Change INTEREST MARGINS ON GICS Net investment income $30.9 $31.9 (3.1) $ 137.9 $ 111.3 23.9 Interest credited 26.9 26.1 3.1 118.6 89.3 32.8 ---------------------------------------------- Net interest margin 4.0 5.8 (31.0) 19.3 22.0 (12.3) ---------------------------------------------- OTHER INCOME AND EXPENSES External fees and other income 1.8 1.7 5.9 6.2 4.0 55.0 Internal fees and other income 1.5 1.5 0.0 6.4 6.4 0.0 Other operating expenses 2.0 2.3 (13.0) 8.4 8.7 (3.4) ---------------------------------------------- Net operating income before taxes 5.3 6.7 (20.9) 23.5 23.7 (0.8) Net realized investment (losses) gains (9.8) 11.0 N/M (23.3) 10.0 N/M ---------------------------------------------- Net income before taxes $(4.5) $17.7 N/M $ 0.2 $ 33.7 (99.4) ==============================================
Year ended December 31 (In millions) 1999 1998 % Change GIC DEPOSITS Outstanding GIC deposits, beginning of period $ 1,791.8 $ 985.2 81.9 Withdrawals during the period (1,580.1) (339.4) N/M Deposits during the period 1,036.3 1,056.7 (1.9) Interest credited during the period 118.6 89.3 32.8 ---------------------------- Outstanding GIC deposits, end of period $ 1,366.6 $ 1,791.8 (23.7) ============================ Includes $3.0 and $0.3 million of traditional GIC deposits for the years ended December 31, 1999 and 1998, respectively.
December 31 (In millions) 1999 1998 GIC SCHEDULED MATURITIES 1999 $ 0.0 $ 337.5 2000 83.1 83.7 2001 121.4 25.8 2002 33.3 31.9 2003+ 105.0 0.0 ---------------------- 342.8 478.9 Floating rate funding agreement balances 1,023.8 1,312.9 ---------------------- $1,366.6 $1,791.8 ====================== Includes $198.4 million of fixed rate funding agreement balances for the year ended December 31, 1999.
Page 24 ALLMERICA FINANCIAL CORPORATION CORPORATE CONDENSED INCOME STATEMENTS
Quarter ended December 31 Year ended December 31 (In millions) 1999 1998 % Change 1999 1998 % Change REVENUES Net investment income $ 1.1 $ 3.0 (63.3) $ 6.0 $ 11.9 (49.6) Other income 0.0 0.0 0.0 0.0 1.0 N/M ------------------------------------------------------- Total operating revenue 1.1 3.0 (63.3) 6.0 12.9 (53.5) OPERATING EXPENSES Interest expense 3.9 4.6 (15.2) 15.4 16.0 (3.8) Other operating expenses 13.3 13.7 (2.9) 49.9 47.8 4.4 ------------------------------------------------------- Total operating expenses 17.2 18.3 (6.0) 65.3 63.8 2.4 ------------------------------------------------------- Net operating loss before taxes and minority interest (16.1) (15.3) 5.2 (59.3) (50.9) 16.5 Net realized investment (losses) gains (0.8) 0.4 N/M (3.2) 0.8 N/M ------------------------------------------------------- Net loss before taxes and minority interest $(16.9) $(14.9) 13.4 $(62.5) $(50.1) 24.8 =======================================================
Page 25 ALLMERICA FINANCIAL CORPORATION NET INVESTMENT INCOME, INCLUDING CLOSED BLOCK
(In millions, except yields) Year ended December 31, 1999 Allmerica Allmerica Risk Financial Asset Management Yield Services Yield Management Yield Corporate Yield Total Yield Fixed maturities $217.0 6.65% $221.6 8.20% $114.2 6.64% $ 2.4 6.23% $555.2 7.18% Equity securities 1.4 2.69% 1.0 1.41% 0.0 0.00% 0.0 0.00% 2.4 1.97% Mortgages 0.0 0.00% 41.7 8.37% 14.4 8.31% 0.0 0.00% 56.1 8.36% All other 7.3 0.00% 49.3 0.00% 12.2 0.00% 2.6 0.00% 71.4 0.00% Investment expenses (4.3) 0.00% (8.8) 0.00% (2.6) 0.00% 0.0 0.00% (15.7)0.00% ------------------------------------------------------------------------------------ Total $221.4 6.40% $304.8 7.39% $138.2 7.16% $ 5.0 4.43% $669.4 6.95% ===================================================================================== Includes purchase accounting adjustments of $4.6 million for the year ended December 31, 1999. Includes corporate eliminations of $1.0 million for the year ended December 31, 1999.
(In millions, except yields) Year ended December 31, 1998 Allmerica Allmerica Risk Financial Asset Management Yield Services Yield Management Yield Corporate Yield Total Yield Fixed maturities $223.0 6.65% $232.0 8.18% $ 84.7 6.82% $ 8.3 6.95% $548.0 7.25% Equity securities 6.6 1.76% 0.6 0.88% 0.0 0.00% 0.0 0.00% 7.2 1.61% Mortgages 0.0 0.00% 49.8 9.72% 17.9 10.8% 0.0 0.00% 67.7 9.98% All other 4.8 0.00% 32.4 0.00% 10.8 0.00% 1.8 0.00% 49.8 0.00% Investment expenses (4.6) 0.00% (8.4) 0.00% (2.0) 0.00% 0.0 0.00% (15.0)0.00% ----------------------------------------------------------------------------------- Total $229.8 6.02% $306.4 7.56% $111.4 7.67% $10.1 6.02% $657.7 6.93% ==================================================================================== Includes purchase accounting adjustments of $4.0 million for the year ended December 31, 1998. Includes corporate eliminations of $1.8 million for the year ended December 31, 1998.
Page 26 ALLMERICA FINANCIAL CORPORATION HISTORICAL FINANCIAL HIGHLIGHTS
(In millions, except per share data) 1999 Q4 99 Q3 99 Q2 99 Q1 99 1998 Q4 98 Q3 98 Q2 98 Q1 98 NET OPERATING INCOME BEFORE TAXES AND MINORITY INTEREST Risk Management $ 199.6 $ 65.0 $ 49.5 $ 55.3 $ 29.8 $ 149.6 $ 52.4 $ 24.6 $ 34.9 $ 37.7 --------------------------------------------------------------------------------------------------- Asset Accumulation Allmerica Financial Services 205.5 54.2 54.7 47.7 48.9 169.0 43.5 39.1 44.2 42.2 Allmerica Asset Management 23.5 5.3 5.7 6.8 5.7 23.7 6.7 6.9 6.2 3.9 --------------------------------------------------------------------------------------------------- 229.0 59.5 60.4 54.5 54.6 192.7 50.2 46.0 50.4 46.1 --------------------------------------------------------------------------------------------------- Corporate (59.3) (16.1) (13.7) (13.5) (16.0) (50.9) (15.3) (10.6) (12.7) (12.3) --------------------------------------------------------------------------------------------------- Total net operating income before federal income taxes and minority interest 369.3 108.4 96.2 96.3 68.4 291.4 87.3 60.0 72.6 71.5 Federal income taxes on operating income (72.4) (23.6) (16.4) (19.3) (13.1) (53.1) (13.8) (10.7) (12.2) (16.4) Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust (16.0) (4.0) (4.0) (4.0) (4.0) (16.0) (4.0) (4.0) (4.0) (4.0) Equity in earnings 0.0 0.0 0.0 0.0 0.0 (9.8) (2.4) (1.9) (1.7) (3.8) --------------------------------------------------------------------------------------------------- Consolidated net operating income $ 280.9 $ 80.8 $ 75.8 $ 73.0 $ 51.3 $ 212.5 $ 67.1 $ 43.4 $ 54.7 $ 47.3 ================================================================================================== INCOME FROM CONTINUING OPERATIONS $ 345.1 $ 68.4 $ 59.1 $ 66.8 $ 150.8 $ 214.7 $ 67.7 $ 24.3 $ 59.2 $ 63.5 ================================================================================================== NET INCOME $ 295.8 $ 68.4 $ 13.1 $ 60.2 $ 154.1 $ 201.2 $ 65.9 $ 8.2 $ 60.3 $ 66.8 ================================================================================================== PER SHARE DATA (DILUTED) NET OPERATING INCOME $ 5.06 $ 1.48 $ 1.3 $ 1.32 $ 0.89 $ 3.52 $ 1.12 $ 0.71 $ 0.91 $ 0.78 INCOME FROM CONTINUING OPERATIONS $ 6.21 $ 1.25 $ 1.08 $ 1.21 $ 2.61 $ 3.56 $ 1.13 $ 0.40 $ 0.98 $ 1.05 NET INCOME $ 5.33 $ 1.25 $ 0.24 $ 1.09 $ 2.67 $ 3.33 $ 1.10 $ 0.13 $ 1.00 $ 1.11 DIVIDENDS $ 0.25 $ 0.00 $ 0.25 $ 0.00 $ 0.00 $ 0.15 $ 0.00 $ 0.05 $ 0.05 $ 0.05 WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) 55.5 54.6 54.7 55.1 57.7 60.3 59.9 60.6 60.5 60.3 BALANCE SHEET Total investments $ 7,888.7 $ 8,265.7 $ 9,043.7 $ 9,163.1 $ 9,057.6 $ 9,169.0 $ 9,274.0 $ 8,923.8 Separate account asets $17,629.6 $15,102.1 $15,635.9 $14,329.4 $13,697.7 $11,424.9 $12,260.5 $11,425.4 Total assets $30,769.6 $29,080.0 $29,826.4 $28,461.2 $27,653.1 $25,233.5 $25,816.4 $24,511.8 Total shareholders' equity $ 2,240.2 $ 2,213.2 $ 2,248.7 $ 2,387.5 $ 2,458.6 $ 2,480.3 $ 2,539.4 $ 2,468.8 Book value per share $ 41.32 $ 40.86 $ 41.49 $ 42.30 $ 41.95 $ 41.02 $ 42.04 $ 40.94 Book value per share, excluding SFAS No.115 $ 42.71 $ 41.76 $ 41.45 $ 40.97 $ 38.87 $ 38.08 $ 38.01 $ 37.07 Net operating income excludes net realized gains (losses) and other non- operating items, net of taxes and minority interest.
PAGE 27 ALLMERICA FINANCIAL CORPORATION HISTORICAL FINANCIAL HIGHLIGHTS
(In millions, except per share data) 1997 Q4 97 Q3 97 Q2 97 Q1 97 1996 Q4 96 Q3 96 Q2 96 Q1 96 NET OPERATING INCOME BEFORE TAXES AND MINORITY INTEREST Risk Management $ 174.2 $ 54.7 $ 36.1 $ 45.6 $ 37.8 $ 173.1 $ 43.6 $ 63.0 $ 40.0 $ 26.5 ------------------------------------------------------------------------------------------------- Asset Accumulation Allmerica Financial Services 134.6 35.0 37.8 32.0 29.8 106.8 28.2 27.4 28.0 23.2 Allmerica Asset Management 18.4 4.6 5.2 5.4 3.2 11.5 5.4 2.8 2.1 1.2 ------------------------------------------------------------------------------------------------- 153.0 39.6 43.0 37.4 33.0 118.3 33.6 30.2 30.1 24.4 ------------------------------------------------------------------------------------------------- Corporate (48.0) (17.2) (11.8) (8.0) (11.0) (58.0) (21.8) (10.4) (11.5) (14.3) ------------------------------------------------------------------------------------------------- Total net operating income before federal income taxes and minority interest 279.2 77.1 67.3 75.0 59.8 233.4 55.4 82.8 58.6 36.6 Federal income taxes on operating income (63.4) (16.7) (16.0) (18.9) (11.8) (50.8) (11.2) (21.5) (14.8) (3.3) Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust (14.5) (4.0) (4.1) (4.0) (2.4) 0.0 0.0 0.0 0.0 0.0 Equity in earnings (37.0) (5.4) (0.5) (16.5) (14.6) (61.5) (14.9) (21.7) (13.3) (11.6) ------------------------------------------------------------------------------------------------- Consolidated net operating income $ 164.3 $ 51.0 $ 46.7 $ 35.6 $ 31.0 $ 121.1 $ 29.3 $ 39.6 $ 30.5 $ 21.7 ================================================================================================= INCOME FROM CONTINUING OPERATIONS $ 192.6 $ 89.6 $ 55.6 $ 33.9 $ 13.5 $ 164.4 $ 37.4 $ 43.6 $ 39.7 $ 43.7 ================================================================================================ NET INCOME $ 209.2 $ 94.9 $ 60.7 $ 37.7 $ 15.9 $ 181.9 $ 45.3 $ 46.7 $ 42.6 $ 47.3 ================================================================================================ PER SHARE DATA (DILUTED) NET OPERATING INCOME $ 3.00 $ 0.85 $ 0.80 $ 0.71 $ 0.62 $ 2.41 $ 0.58 $ 0.79 $ 0.61 $ 0.43 INCOME FROM CONTINUING OPERATIONSCC $ 3.52 $ 1.49 $ 0.95 $ 0.67 $ 0.27 $ 3.29 $ 0.76 $ 0.87 $ 0.79 $ 0.87 NET INCOME $ 3.82 $ 1.58 $ 1.04 $ 0.75 $ 0.32 $ 3.63 $ 0.91 $ 0.93 $ 0.85 $ 0.94 DIVIDENDS $ 0.20 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.20 $ 0.05 $ 0.05 $ 0.05 $ 0.05 WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) 54.8 60.2 58.4 50.3 50.2 50.1 50.1 50.1 50.1 50.1 BALANCE SHEET Total investments $ 8,700.7 $ 8,741.1 $ 8,808.4 $ 8,758.3 $ 8,993.4 $ 9,247.2 $ 9,439.6 $ 9,479.2 Separate account assets $ 9,755.4 $ 9,233.6 $ 8,036.3 $ 6,705.8 $ 6,233.0 $ 5,586.8 $ 5,197.9 $ 4,761.6 Total assets $22,549.0 $21,967.2 $20,963.5 $19,625.6 $18,970.3 $18,728.5 $18,506.1 $18,162.7 Total shareholders' equity $ 2,381.3 $ 2,263.4 $ 1,782.5 $ 1,672.0 $ 1,724.7 $ 1,633.0 $ 1,563.5 $ 1,555.9 Book value per share $ 39.71 $ 37.74 $ 35.47 $ 33.35 $ 34.40 $ 32.57 $ 31.20 $ 31.03 Book value per share, excluding SFAS No.115 $ 36.08 $ 34.54 $ 32.66 $ 31.97 $ 31.78 $ 30.92 $ 30.04 $ 29.24 Net operating income excludes net realized gains (losses) and other non- operating items, net of taxes and minority interest.
PAGE 28 ALLMERICA FINANCIAL CORPORATION HISTORICAL FINANCIAL HIGHLIGHTS
(In millions, except per share data) 1995 Q4 95 Q3 95 Q2 95 Q1 95 NET OPERATING INCOME BEFORE TAXES AND MINORITY INTEREST Risk Management $ 212.0 $ 54.6 $ 58.0 $ 51.4 $ 48.0 ------------------------------------------------ Asset Accumulation Allmerica Financial Services 60.0 15.4 16.0 11.4 17.2 Allmerica Asset Management 12.2 3.5 2.5 3.8 2.4 ------------------------------------------------ 72.2 18.9 18.5 15.2 19.6 ------------------------------------------------ Corporate (47.8) (15.4) (11.7) (9.6) (11.1) ------------------------------------------------ Total net operating income before federal income taxes and minority interest 236.4 58.1 64.8 57.0 56.5 Federal income taxes on operating income (67.4) (20.2) (17.8) (14.1) (15.3) Minority interest: Distributions on mandatorily redeemable preferred securities of a subsidiary trust 0.0 0.0 0.0 0.0 0.0 Equity in earnings (69.2) (15.4) (19.4) (18.3) (16.1) ----------------------------------------------- Consolidated net operating income $ 99.8 $ 22.5 $ 27.6 $ 24.6 $ 25.1 =============================================== INCOME FROM CONTINUING OPERATIONS $117.9 $ 34.2 $ 25.6 $ 24.2 $ 33.9 =============================================== NET INCOME $133.9 $ 40.7 $ 30.1 $ 26.4 $ 36.7 ================================================ PER SHARE DATA (DILUTED) NET OPERATING INCOME $ 1.99 $ 0.45 $ 0.55 $ 0.49 $ 0.50 INCOME FROM CONTINUING OPERATIONS $ 2.35 $ 0.68 $ 0.51 $ 0.48 $ 0.68 NET INCOME $ 2.67 $ 0.81 $ 0.60 $ 0.53 $ 0.73 DIVIDENDS $ 0.05 $ 0.05 $ 0.00 $ 0.00 $ 0.00 WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) 50.1 50.1 50.1 50.1 50.1 BALANCE SHEET Total investments $ 9,430.7 $ 9,898.1 $ 9,941.5 $ 0.0 Separate account assets $ 4,348.8 $ 4,076.7 $ 3,659.2 $ 0.0 Total assets $17,757.7 $17,163.8 $16,798.7 $ 0.0 Total shareholders' equity $ 1,574.2 $ 1,255.5 $ 1,230.1 $ 0.0 Book value per share $ 31.40 $ 25.04 $ 24.54 $ 0.0 Book value per share, excluding SFAS No. 115 $ 28.35 $ 23.23 $ 22.63 $ 0.0 Net operating income excludes net realized gains (losses) and other non- operating items, net of taxes and minority interest.
PAGE 29 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:
Quarter Ended 1999 Price Range Dividends High Low Per Share March 31 $57.88 $50.19 $0.00 June 30 $62.25 $54.50 $0.00 September 30 $58.44 $47.56 $0.25 December 31 $59.69 $46.50 $0.00
Quarter Ended 1998 Price Range Dividends High Low Per Share March 31 $66.38 $42.31 $0.05 June 30 $72.13 $61.31 $0.05 September 30 $72.13 $57.31 $0.05 December 31 $57.88 $39.25 $0.00
INDUSTRY RATINGS A.M. Standard Duff & Claims Paying Best & Poors Moody's Phelps - ----------------------------------------------------------------------------- First Allmerica Financial Life Insurance Company (a) A AA- A1 AA - ----------------------------------------------------------------------------- Allmerica Financial Life Insurance and Annuity Company (b) A AA- A1 AA - ----------------------------------------------------------------------------- The Hanover Insurance Company A AA- A1 - - ----------------------------------------------------------------------------- Citizens Insurance Company of America A - - - (a) Formerly State Mutual Life Assurance Company of America (b) Formerly SMA Life Assurance Company Standard Duff & Debt Ratings & Poors Moody's Phelps - ----------------------------------------------------------------------------- Allmerica Financial Corporation Senior Debt A- A2 A+ - ----------------------------------------------------------------------------- Allmerica Financial Corporation Capital Securities BBB A2 - - ----------------------------------------------------------------------------- Allmerica Financial Corporation Short Term Debt A1+ P1 - - ----------------------------------------------------------------------------- First Allmerica Financial Life Insurance Company Short Term Debt A1+ P1 - - ----------------------------------------------------------------------------- TRANSFER AGENT First Chicago Trust Company of New York A Division of EquiServe, LP 525 Washington Boulevard Jersey City, NJ 01303-2512 1-800-317-4454 COMMON STOCK Common stock of Allmerica Financial Corporation is traded on the New York Stock Exchange under the symbol "AFC". INQUIRIES Henry P. St. Cyr, CFA Vice President, Investor Relations (508) 855-2959 hstcyr@Allmerica.com William J. Steglitz, CPA Manager, Investor Relations (508) 855-3883 wsteglitz@Allmerica.com 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 -----END PRIVACY-ENHANCED MESSAGE-----